Between the end of 2022 and the beginning of 2023, the great supply chain crisis, which had caused enormous problems throughout the world trade system and made many goods and raw materials unobtainable, eased considerably. The enormous delays that had occurred since the second half of 2021 in naval shipments have partially subsided, and supplies of consumer goods, raw materials, construction materials and electronic products are now less serious than they were between 2021 and 2022.
This is good news for inflation, of which the trade crisis had been one of the factors, but we must bear in mind that the crisis is not entirely over: in many sectors there are still shortages of raw materials, as we are seeing in these weeks in Italy with over-the-counter medicines. Furthermore, things could get complicated again in the coming months, due to the serious wave of Covid that is hitting China in recent weeks.
The crisis of the global supply chain, i.e. of that complex and interconnected system of transport and supplies on which trade and the economy of the world are based, had begun in the second half of 2021 and had been caused by various factors: the crisis caused by the pandemic, a decline in industrial production, labor shortages, as well as some notable poor choices by shipping companies, which had underestimated the recovery of trade in the post-pandemic period.
The result had been a blockade of the ports, an exceptional increase in the costs of maritime shipments, major slowdowns in the procurement of raw materials and numerous goods. Rising costs and the scarcity of goods, in the face of very strong demand, had driven up prices, and the crisis in world trade had become one of the main factors in the rise in inflation over the last year and half.
Most of these phenomena have now subsided: partly thanks to the fact that, over the months, the various operators in the global supply chain have tried to solve the problems that afflicted them last year and are readjusting, and in partly thanks to the fact that the increase in interest rates by Western central banks has led to a reduction in demand.
Most of the improvements have come from the logistics and transportation side. Many ports that were congested for months early last year, especially in the United States and China, are now operating normally. Shipments of goods, which until a few months ago encountered enormous difficulties, have returned to levels of efficiency similar to the period before the crisis. A good indicator that the transportation crisis may be over is the cost of shipping: In September 2021, it cost $20,600 to ship a container from China to the US West Coast. Today, however, it costs 1,400 dollars: it is 93 percent less, and it is a figure more or less equivalent to the pre-crisis rates.
These improvements have occurred both because some problems (such as the shortage of containers) have been resolved, and because demand has decreased: once the lockdowns ended, people stayed at home less and started spending their money no longer on goods materials but in services, such as bars, restaurants, cinemas, gym classes and so on. In the United States, demand for goods fell by 4.1 percent compared to March 2021. And if demand drops, fewer goods are moved: in the ports of Los Angeles and Long Beach, which were between the most congested, handled containers decreased by 26 percent.
The situation is more complex with regard to shortages of goods and raw materials, which are more difficult to solve. In many sectors, such as the chemical, pharmaceutical and automotive sectors, there are still blockages and slowdowns. This is because often for companies interested in increasing production it means implementing complex and long-lasting reforms, such as profoundly overhauling their production processes, changing the supply system and so on.
Even in this sector, however, things are gradually improving: in Germany, for example, the companies that in December 2022 claimed to have had shortages of raw materials were 50.7 percent. There are many, but in November they were 59.3 percent, and even more the previous month.
– Read also: Is the global trading system changing?
