Home > NewsRelease > Disruption Report #42
Text
Disruption Report #42
From:
Richard Gottlieb -- Toy Industry Expert Richard Gottlieb -- Toy Industry Expert
For Immediate Release:
Dateline: New York, NY
Wednesday, January 12, 2022

 

“The Mother of All Supply Shocks”

China is aggressively fighting Coronavirus. With the Olympics only a month away, the Chinese government is determined to keep the Coronavirus at bay. The supply chain is becoming collateral damage as any incident of Coronavirus occurring sparks a shutdown. Just last week, truck movements in and out of the ports of Ningbo and Shanghai were severely limited due to some drivers getting sick.

How worrying is it? consider this headline from Bloomberg News, “The ‘Mother of All’ Supply Shocks Lurks in China’s Covid Crackdowns.” Here is how the article describes it:

The paradox of China’s aggressive “Covid-zero” strategy is that although it helps contain the virus spread, to do so usually requires significant disruption or lockdowns as authorities limit the movement of people. The repeated mandatory testing of whole cities can interrupt businessess and production

Inflation Highest in 40 Years

Last year, inflation was up 7%, marking the most significant jump in prices since the 1980s. Our recent Global Toy News survey (“The Toy Industry’s Biggest Worries: Results of the “2022 Looking Forward Survey‘”) indicated that “56% of respondents projected that their costs would
increase 10% in 2022
, while 23% anticipated them to increase by 15%.

Compelling New Research On the Supply Chain

I have found an excellent article in Barron’s entitled “Supply-Chain Disruptions Are Easing. Why ‘Normal’ Is Still Far Off.” The report is by Nathan Sheets, chief global economist at Citi Research. He writes:

Shortages and shipping delays threaten to continue to drive up prices. In parallel, production challenges and the reduced availability of goods threaten to hold back real spending. People can’t buy goods that aren’t produced or can’t be shipped. With this in mind, my colleagues at Citi and I recently concluded a deep-dive examination of these developments. One notable finding is that we see surprisingly varied effects around the globe.

He reports that every part of the world has a different experience with the
supply chain. In the U.S., demand has been high; thus, the country is
experiencing out of stocks, inflation, and wage increases.

In Europe, on the other hand, demand has weakened despite challenges in
getting products to market. European countries have, as a result, experienced
both reduced wages and price increases—a bad combination.

Mr. Sheets summarizes as follows:

Ordering a product is now as easy as “point and click.” But producing that product requires setting production schedules, finding suppliers, locating workers, and much more—all of which requires real time. The resulting supply-chain disruptions are, at least in part, the result of firms desperately trying to catch up.

Bottom line, we see notable, albeit gradual, improvements to supply-chain disruptions going forward.

Richard Gottlieb

Global Toy Experts / Global Toy News

646 675 3019

richard@globaltoyexperts.com

 

News Media Interview Contact
Name: Richard Gottlieb
Title: CEO
Group: Richard Gottlieb and Associates, LLC
Dateline: New York, NY United States
Cell Phone: 646-675-3019
Jump To Richard Gottlieb -- Toy Industry Expert Jump To Richard Gottlieb -- Toy Industry Expert
Contact Click to Contact