The present-day supply chain has affected daily life for everyone, especially for those who’ve grown a business from it.
Lately, the rise and fall of the economy is more jolting than welcoming. COVID and political tensions have driven the market to places most haven’t seen in their lifetime.
Supply chain woes originate often from diverse, complicated and often political issues. Higher delivery rates, labor shortages, limited storage space, and much more place stress on the supply chain. Analysts are seeing hope in the market for 2022, but the overall feeling for some professionals is one of distrust–and understandably so.
Some analysts are hopeful, but remain cautious with that hope.
The Equipment Finance Advisor published an article on their site wherein Kenny Vieth, the ACT’s President and Senior Analyst, commented on the supply and demand relationship.
Vieth examined that drivers can now transport a reliable amount of the the world’s supply. This helps balance and unwind the demand and supply relationship.
Vieth continued, evaluating why there may still be stress woven into our everyday buying lives. He mentioned potential issues of supply due to growing political tensions. There are two big issues when considering the future of the supply and demand relationshipfor us, and how it will affect the products we all use daily.
- The first consideration is the diminishing supply of Ukrainian neon due to facility shutdowns. These shutdowns are leading to supply shortages in semiconductor chips. A shortage of those chips could mean that production of electronics slows. If demand also stays consistent during that break in productions, we may have a few issues.
- The second consideration is the diminishing supply of vehicle parts due to labor shortages. China engages in zero-COVID lockdowns, meaning that those exposed are sent to quarantine camps. These lockdowns take workers out of the manufacturing plants. This means that repairs take longer because parts that are backordered for up to 12 months.
It isn’t just the analysts feeling the tension. Professionals, especially in the equipment finance industry, are cautiously confident too
The Equipment Leasing & Finance Foundation released their Monthly Confidence Index for the Equipment Finance Industry for April 2022.
The study found that fewer business executives believe their business conditions will improve within the next four months. A growing group of professionals now believe the demand for leases and loans may decrease, despite not believing so in March. This analysis and future analyses find that there is a newfound pessimism about the security in the market. Business leaders may be unwilling to invest in a market wherein demand seems to dwindle.
The study continues, further evaluating outlook for company growth. Despite the best efforts of hiring managers, these managers are less confident they will be able to hire employees. Turnover and worker shortages have a lasting impact on perceived company sustainability. When managers can’t get employees, they are left carrying a lot of the work on their own. This leaves the managers sacrificing their well-being to keep a company afloat. Tired managers are searching for tired workers.
With a decreased ability to grow, companies feel a decreased ability to spend as well. More companies believe their spending will decrease within the next 6 months. According to the Index, “In April 29.6% of respondents indicate they believe their company will increase spending on business development activities during the next six months, down from 42.9% the previous month.” Here, there is again a sense of pessimism in the market. The increasing prices for cost of living means companies are cutting back to assure there is a nest egg to lean back on in a time of rapid inflation.
When we lose confidence in our market, the market responds.
Although the supply and demand relationship is stabilizing, there is uncertainty in the market leading to lack of confidence. The consumers and the suppliers can feel it.
The world is ever-changing. Our resiliency to that change leaves a lasting impression on our global market and our future. Analysts see hope, and they are trained in realism.
We, too, can see hope.
We can allow ourselves to feel hope. We can spread it to others so the world may become a little lighter. The economy will respond to any movement with the right fuel.
Research Cited:
ACT Research: Supply and Demand Relationship Becoming More Equally Balanced.” ACT Research: Supply and Demand Relationship Becoming More Equally Balanced, Equipment Finance Advisors, 19 Apr. 2022, https://www.equipmentfa.com/news/34137/act-research-supply-and-demand-relationship-becoming-more-equally-balanced.
Visconage, Charlie. “Equipment Leasing and Finance Association – Equipment Finance Industry Confidence Dips Further in April.” ELFA, ELFA, 21 Apr. 2022, https://www.elfaonline.org/news/industry-news/read/2022/04/21/equipment-finance-industry-confidence-dips-further-in-april.
