In the topsy-turvy world of supply chain and logistics, there are some hints at the situation improving. The Covid-19 cases are on a downward trend. The ports are working faster than they have in the past year. There is a container backlog, but not nearly like last year.
Anyone in manufacturing or farming has cast their watchful eye on the fluctuating oil prices, which are impacting everything from your food prices to airline travel to Vaseline. U.S. freight is more expensive and fuel surcharges are getting out of hand. Everything is dependent upon the war in Ukraine. If it ceases any time soon, some things will return to normal. Global oil supply is beginning to stabilize compared to what we saw in March. Crude prices are steadily trending downward, after hitting record numbers. There are many factors driving the cost of crude oil down, but the most recent ones include:
- The announcement of the IEA members to release 60 million barrels in the next 6 months
- US producers have added 13 oil rigs, and
- China extends lockdowns in major cities to cope with another Covid-19 outbreak
We are beginning to see another backlog of container ships begin creeping up as China copes with the aforementioned Covid-19 breakout. Major ports such as Shanghai and Ningbo are seeing backlogs grow because of their shortage of port workers and truck drivers. To help, China has begun to re-route ships to a few more northern ports where trucking services haven’t been as impacted.
Supply chains will continue to struggle as long as the Russia-Ukraine conflict goes on, and for some time beyond. Russia is a major global exporter on many of the raw materials we utilize. With the embargo in affect, this has created a shortage of materials, driving up costs. Once the conflict is over and negotiations are completed to begin lifting sanctions, we will be in a world of short supply for many needed items. Hopefully, by end of Q3/Q4, we will begin to see some relief on many of the domestically made items as inventory stockpiles continue to be filled. Lumber pricing has stabilized for now, since we’ve overcome the Canadian border blockage, plus the truckers and railroad workers have returned to work.
Watch here for more updates as I get them.