Global Supply Chains to Continue Facing Disruptions
Companies around the world are facing numerous supply chain disruptions that could be further complicated in the wake of Russia’s invasion of Ukraine. During the pandemic, businesses began to develop resilience-focused measures to address these unprecedented challenges but uncertainty continues permeating the sector.
Regardless of how much companies learned during the pandemic and other pivotal episodes in recent history, few companies believe they have a clear idea of how the war in Ukraine will affect their supply chain and for how long, according to a report by Bain & Company.
In Mexico, many companies have carried on their businesses as usual and even hired more employees, helping the region address short-term operational constraints. However, this trend could turn as companies around the world are increasingly having to cope with demand volatility of certain raw materials and products, while consumers have to adjust their spending amid rising food and energy costs.
“The impact of supply issues will vary by country and be heavily influenced by actions against Russian oil and gas exports; whether government-mandated or self-imposed,” said Bain & Company.
Sectors such as fuel, oil and metals are facing numerous challenges, with the prices of oil and gas expected to continue increasing in a scenario of deeper sanctions, especially as the winter season approaches. To address this matter, supply chains around the world could benefit from more transparency with customers, helping them identify and manage future Russian exposure and comply with trade restrictions.
In the oil and gas sector, the challenges forecasted for the next six months will cause further volatility following the unwinding of partnerships between western and Russian energy groups, such as “BP choosing to divest its shareholding in Rosneft and Shell cutting its ties with Gazprom,” said Bain & Company.
The agricultural sector can expect the prices of fertilizers to increase, reflecting the importance of Russia and Belarus as major global exporters of fertilizer and its components. Wheat and corn prices may also remain elevated given the importance of Ukrainian and Russian exports. Finally, the price of steel and other commodities derived from natural resources may continue to rise, potentially affecting the aerospace sector in the long term, as previously mentioned in an MBN article.