Current global supply chain issues, which some experts believe may last until early 2023, continue to hammer industry sectors from consumer discretionary to autos and housing. According to an Oxford Economics research briefing by economist Oren Klachkin, overall U.S. supply chain pressures worsened during the month of October after having eased in September.
October saw the number of cargo ships waiting to unload at Los Angeles and Long Beach hit an all-time high. And although transportation problems actually “eased modestly” last month, it still remains the most pressing supply chain issue — followed by prices, activity, labor, and inventory — based on preliminary data and Oxford Economics forecasts.
“Preliminary data show that logistics difficulties remained the most acute source of stress while prices, activity, and labor challenges increased,” Oxford Economics said. “Inventory pressures fell slightly, but conditions remain far from optimal as supply struggles to keep up with demand.”
Oxford Economics, based in Oxford, England, offers economic forecasts, quantitative analysis, global forecasting, and modeling services to a worldwide client base of over 2,000 international corporations, financial institutions, government organizations, and universities.
By the numbers
Seaborne shipping costs fell in October but remained at a level 450% above pre-pandemic numbers, as total seaborne cargo volumes received at U.S. ports reached a record high at nearly 20% above pre-pandemic levels, Oxford said. As for ground shipping woes, the briefing noted that the American Trucking Associations (ATA) estimates the driver shortage to be “worse than previously thought” at 80,000.
“The Biden administration’s deal to keep the LA and Long Beach ports working 24/7 is a step in the right direction, but isn’t enough to solve current issues because of yard space and workforce constraints, not to mention new fees on empty containers,” Oxford said.
In addition, manufacturing production costs are up 40% to 50% year-over-year while prices for services paid by producers are up over 6% year-over-year (a record high), according to Oxford. This resulted in the worsening of an “extreme imbalance” between finished goods and raw materials last month.
“Inventories fell less in Q3 than Q2, but the inventory-to-sales ratio remained lower at the start of Q4 than pre-Covid for 70% of manufacturing sectors,” Oxford said.
Things are less bleak for job-related supply chain issues as job openings and overtime hours worked are at multi-year highs, with labor cost pressures “firming” according to the briefing. Oxford cited better health conditions, school reopenings, and expired enhanced unemployment benefits as being driving factors in getting Americans back to work. However, it may be long before the labor market fully recovers.
Thomas Hum is a writer at Yahoo Finance. Follow him on Twitter @thomashumTV
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