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Will the supply chain troubles get any better in 2023?

A container ship of Chinese Cosco shipping lies in the harbor in Hamburg, Germany, Wednesday, Oct. 26, 2022. The German government agreed on a compromise to allow Chinese shipping group COSCO to take a smaller stake than previously planned in the operator of the country’s biggest container terminal, over concerns that they pose a national security risk. (AP Photo/Michael Probst)

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(NEXSTAR) — Supply chain struggles have been apparent for the last few years. They have caused empty shelves, shipping delays and even shopping limits. Will it get any better in the new year?

Based on the current data, it’s hard to say.

Around this time last year, dozens of container ships were waiting off the coast of California to unload cargo at the U.S.’s two largest ports in Los Angeles and Long Beach. If you couldn’t find the item you were looking for in-store (likely because it was trapped on a container ship), you may have decided to order it online. That put an even greater demand on importers, leading to more backorders.

Now, there aren’t dozens of cargo ships waiting to unload. Stores have fewer backorders and more overstock. Many COVID-related restrictions have been lifted. Global supply chain pressure has increased since September, but at a much slower rate than we experienced in 2020 and much of 2021, data from the Federal Reserve Bank of New York shows.

“We are in a very different place than we were,” Phil Levy, chief economist at the supply chain consultancy Flexport, told the Associated Press. “If you ask, how long does it take to move stuff, there has been notable improvement. If you measure it by how long would it take to get a cargo from Asia to a destination port, dramatically better.”

Many retailers are still dealing with an abundance of inventory they need to clear out as well. That could slow the influx of new inventory for some.

Some experts believe another unfortunate economic struggle, inflation, is helping to ease the pressure on supply chains. With less available spending money, Americans aren’t seeking out goods in such high demand, allowing supply chains to rebound.

Speaking with Bloomberg, Heath Zarin, founder and CEO of EV Cargo, says he believes 2023 will start with the “economic softness or weakness” we’re experiencing now. This may then “manifest itself in supply chains that are working better” but with less demand.

For some commodities, like poultry and eggs, the supply chain problem wasn’t all human-caused. Instead, a widespread avian flu outbreak put a strain on the industry as thousands of birds were killed to prevent the further spread of the virus. Experts expect the flu to wane into the new year, likely allowing that sector to recover.

Even if the supply chain is better than we have experienced since the start of the pandemic, some industry experts say it could take another year before it stabilizes. In a survey conducted in May and June, most supply chain executives said they “don’t expect a return to a more normal supply chain until the first half of 2024 or beyond.” Far less, 22%, say they expect a return to normal in the second half of 2023.

Other factors like a potential rail strike, geopolitical tensions, and downward shifts in demand, could, according to Forbes, still cause supply chain challenges in 2023 as well.

The Associated Press contributed to this report.

Business

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