It’s no secret there isn’t a way to forecast that equates relief for U.S. companies dependent on international supply of materials, partial finished goods and commodities. Standard trade came to a halt at the beginning of COVID-19 and continues through geo-political unrest and pandemic issues. Challenges continue during inflation, shortages, shipping costs and supply unavailability especially from Asia and Western Europe. Once considered an advantage, international supply is now leaving organizations vulnerable to higher cost and less availability.
For instance, freight transportation costs continue at peak, enabling ocean transportation to rise to premium prices. As consumer spending and international trade increased, congestion at ports led to prolonged lead times. According to Forbes, “shipment delays between China and major United States and European ports have quadrupled since March 2022.” These issues have left U.S. manufacturers frustrated and at risk for potential setbacks, directly impacting their businesses.
Unfortunately, these issues will persist. Many Fortune 100 companies will cope given their infrastructure and market leverage. Mid-tier and those trading globally with U.S. domestic revenues under $4B annually will continue shouldering heavier weight. With consumer spending, the industrial production index (IPI), and the price of crude oil all expected to increase along with growing tensions with global politics, premium costs and prolonged lead times are not expected to relent in the foreseeable future.
There exists a race, beyond market competition, to solidify best positions among the supplier base. Fresh off the pandemic with trade and climate disruptions, it is crucial to remain agile in your procurement and supply chain operations. Those optimizing their supplier base, strategically managing key partners and effectively exploring alternative suppliers (on/near shore) will win. Remaining operationally international should not cease, however conditions exist for enhanced onshore or near-shore strategies. Entrepreneurial and legacy production within North America continues to react to the current market; capacities and capabilities exist and will grow. Items of interest regarding an evaluation of U.S. and neighboring countries’ opportunities:
The problems are difficult, but solvable. While no single movement presents a holistic solution to the current challenges, opportunities always reside. Enable your key talent by:
Argon & Co specializes in transforming business operations. Our excellence resides in Procurement, Supply Chain, Logistics and SG&A functions. With 17 areas of expertise across North America, South America, Europe, UK, Middle East, Asia and Australia/New Zealand, we produce strong, global insights and intelligence along with local, tailored execution. We are dedicated to real results and work alongside clients’ talent to achieve uncommon outcomes.