Supply bottlenecks overcome?
US wholesale inventories up slightly in December
Gabriel ThomasOctober 5, 2026
There are growing signs that the global supply chain crisis, which has thwarted central banks' inflation forecasts, slowed the economic recovery and squeezed corporate profit margins, is finally starting to ease towards the end of this year.
But trade channels are so clogged that it could be well into next year before the hardest-hit industries can resume business as usual - even if a new pandemic doesn't unleash fresh devastation.
"We hope that in the second half of this year we will see a gradual reduction in scarcity, bottlenecks and general supply chain dislocation," Steve Cahillane, CEO of food company Kellogg (NYSE:K), told Reuters.
But he added: "I wouldn't believe there will be a return to a normal environment by 2024 because it's so dramatically disrupted."
The world trading system has never faced anything like the coronavirus.
From 2020, companies responded to the economic downturn by canceling their production plans for the next year, only to be surprised by a surge in demand fueled by the rapid rollout of vaccines and fiscal support for household spending in the United States rich world was triggered.
At the same time, virus containment measures and infection hotspots led to labor shortages and factory closures just as consumer spending shifted from services to goods.
The European Central Bank's chief economist, Philip Lane, compared the impact to the aftermath of World War II, when demand exploded and companies had to quickly switch from producing military to civilian goods.
In export-led economies like Germany, supply shortages at factories have stalled recovery, while rising transportation costs combined with higher fuel prices have pushed US inflation to its highest level in four decades.
MIXED MESSAGES
Now that the milder Omicron variant is prompting authorities to ease restrictions, there are early signs that supply shortages may be easing.
Last week's survey by the Institute for Supply Management (ISM) showed signs of improving labor and delivery performance in the US in the third month, while statements from purchasing managers in Europe also indicated easing pressures.
"Although supply chain bottlenecks continue to weigh on growth, there have been signs that they have peaked, contributing to a moderation in wholesale price inflation," said IHS Markit of the UK results.
While this has raised central bankers' hopes of a more meaningful reduction in inflationary pressures towards the end of the year, they also know that signals from the real economy remain mixed.
Soren Skou, chief executive of shipping giant Maersk, said this week he expects more people to return to ports, more newly built vessels to enter service and consumers to favor services again.
"Sometime this year we will see a more normal situation," predicted Skou.
German shipping company Hapag-Lloyd also saw supply constraints and freight prices ease in the second quarter, but the big unknown for the sector is how long it will take to return to more reliable delivery schedules.
Supply chain analyst Sea-Intelligence said the current shutdown was not unprecedented, but past experience showed it would take 8-9 months for port and hinterland networks to recover.
"Other than that, the market shows no signs that we are on the path to a resolution," Sea-Intelligence CEO Alan Murphy said in an analysis of current trends versus previous data on average ship delays due to interruptions.
NOT LIKE BEFORE COVID
Any solution will depend on there being no further push against the heavily strained supply chains.
Those vulnerabilities were highlighted Thursday when Toyota, General Motors (NYSE:GM), Ford and Chrysler's parent company Stellantis announced that production at their North American plants was suspended due to parts shortages stemming from protests by Canadian truckers against pandemic mandates. was impaired.
Japanese, German and International Monetary Fund officials, meanwhile, have expressed concern about tightening shortages if China's zero-COVID policy - which includes lockdown of entire cities - is used fully against the local outbreak of Omicron.
It will still be some time before consumers see pressures in the supply chain noticeably eased - and they should not necessarily expect prices or availability to return to pre-pandemic levels.
Auto and other manufacturing executives expect prices for a range of commodities to rise throughout the year, but are confident they can raise the prices of their products to offset some or all of the increase.
US motorcycle manufacturer Harley-Davidson (NYSE:HOG) announced it is working with much more limited inventory by introducing a reservation system for customers to order motorcycles.
Jens Bjorn Andersen, CEO of transport and logistics group DSV, said the disruption is so great that the sector will not look like it did before COVID-19, no matter what comes out.
He added: "I never use the word normalization".
