Supply shortages adding to inflationary pressure

Supply shortages will increase inflationary pressure this year and such shortages are unlikely to clear until 2023, according to DP World.

The company commissioned a report that showed that 29% of companies that export are concerned about the risk of rising inflation due to supply chain disruption and 30% of companies expect increasing transport costs to limit export-led growth in 2022, also leading to higher inflation.

The study also showed that just-in-time shipping, once the domain of agile supply chains, is now fading with more than a quarter of companies holding onto stock for three months.

To cope with the pandemic and ease inflationary pressures, companies are also changing their strategic outlook. 48% now said diversifying their supplier base is their primary reconfiguration strategy, with efforts focussed on sourcing raw materials (24%) and managing shipping lines and logistics (21%). The highest cited reason for optimism for global trade was the growth of technology to ease supply chain issues, particularly the adoption of 5G to increase connectivity.

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