Supply Chain Security Arway, Arthur G. ((HOT))

Jochen Thewes, born 1971, is Chairman of the Board of Management of Schenker AG since September 1, 2015. Jochen, whose roots are in the German city of Rheda-Wiedenbrück, is an internationally recognized supply chain and logistics expert, bringing more than 20 years of senior management expertise and experience in both regional and global positions. Over the past years, he has made significant contributions to DB Schenker, most notably since 2011 in his role as Chief Executive Officer in Singapore in the fast-paced and dynamic Asia/Pacific Region, where he was responsible for 13,000 employees spread across 200 locations in 20 countries. Prior to that, he was Senior Vice President Global Ocean Freight based in the Head Office in Essen/Germany.

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Inflation surged in 2021 and persisted at an elevated rate in 2022 as unemployment fell sharply over that period. Both were the result of strong demand and disruptions to supply, which combined to cause considerable tightness in product and labor markets. Output and employment recovered from the pandemic-induced recession of early 2020 and then continued to expand. Ongoing pandemic-related disruptions caused the expansion to be unbalanced, however; soaring demand for goods strained domestic and international supply chains, and labor force participation remained below its prepandemic levels. Those factors contributed to the restrained growth of supply in product and labor markets. As a result, the growth rates of consumer prices, producer prices, and nominal wages increased markedly. The Federal Reserve ended purchases of long-term securities and raised interest rates in 2022.

In 2021, the surge in demand for goods strained domestic and international supply chains, leading to delayed deliveries and shortages of many products. Those disruptions included shortages of semiconductors (key components in automobiles and consumer electronics) and shipping containers. Despite strong demand, domestic production of automobiles declined during the year, falling further below its prepandemic level because of shortages of semiconductors and other supply-side disruptions. Backlogs formed as key U.S. ports struggled to keep up with the elevated volume of imported goods. The lack of availability of construction materials also limited the growth of the supply of new housing and nonresidential structures. Moreover, a shortage of workers in transportation and warehousing compounded those problems with supply chains.

CBO projects that the problems with supply chains that impeded U.S trade flows in 2021 peaked late in that year and will continue to ease in 2022. In 2021, strong global demand for goods strained international supply chains, leading to delayed deliveries and shortages of some imported products and hindering the assembly and delivery of some U.S. exports. Those disruptions included shortages of semiconductors (key components in automobiles and consumer electronics) and shipping containers, logjams at key U.S. ports, and labor shortages in the trucking industry. Those developments also resulted in higher import and export prices; the price indexes for imported goods and exported goods rose by 11 percent and 17 percent, respectively, in 2021. CBO expects that those pressures on global supply chains will ease in the coming year as consumer demand continues to shift back to services and away from goods and as labor shortages in the U.S. transportation industry begin to subside.

The speed at which disruptions to supply chains will ease is uncertain. If consumers and businesses return to prepandemic patterns of spending and production quickly, then such disruptions will abate more quickly, and price pressures will ease more quickly, than they otherwise would. But if that transition takes longer than CBO expects, the pressure on those strained supply chains will persist, dampening and delaying consumption and investment and increasing inflationary pressures. If governments abroad relax measures aimed at mitigating the spread of the virus more quickly than the agency expects, then the strain on global supply chains might ease more rapidly. But if governments abroad pursue more aggressive mitigation measures than CBO anticipates, that might further exacerbate disruptions in global supply chains, and production might increase less rapidly than it otherwise would.