Echo Global Logistics : Reflections on an Eventful 2021 — And a Look Ahead to 2022

ECHO

The supply chain typically operates behind the scenes, unnoticed and often taken for granted by people who aren't directly involved in keeping the flow of materials and goods moving. That all changed in 2020 when the pandemic disrupted supply chains across the globe. The supply chain remained front and center in 2021 as disruptions continued and transportation and logistics professionals looked for new ways to move materials and products.

The holiday season is expected to put even more pressure on the supply chain, and many analysts are anticipating shortages and delays. Everyone is wondering what 2022 will bring for the supply chain. But to understand how next year might unfold, it's helpful to take a closer look at how earlier events shaped the landscape. Here are three trends that changed the supply chain during 2020-2021:

Some analysts thought widespread distribution of vaccines would stabilize rates and speed up the return to normal, but then the Delta variant hit. Spending remained strong, but as manufacturers reopened to meet demand, they encountered supply chain issues of their own on the materials side and port backlogs on the finished goods front, further complicating over-the-road transportation. In short, it was a perfect storm that made an already critical driver shortage worse.

Some created home offices or took on major home renovation projects. They bought new furniture and purchased household goods. This increase in home-focused demand had a major impact on delivery routes, shifting last-mile carriers from commercial centers to residential areas.

M&A trends in the transportation and logistics sector were off the charts in the first half of 2021. A PwC report says deal value grew 86% in the first half of 2021 compared to the previous year. Average deal size grew 158% (driven in part by a multibillion-dollar railroad purchase), and analysts expect M&A activity in the sector to remain high due to increased infrastructure spending.

With the current landscape in mind, the 2022 outlook comes into sharper focus. Here are three trends to watch in the year ahead:

This look ahead suggests that the challenges transportation and logistics professionals struggled with in 2020-2021 will continue to influence how the industry operates in 2022. The immediate past usually influences future events to some extent, but the scale of the issues the industry confronted over the past year and a half makes it more likely that these factors will continue to impact the sector.

It's also important to keep opportunities in mind. M&A activity is likely to remain high in 2022 because strategic players see the potential in the sector in a new light. Transportation and logistics players - especially those that are tech-driven - faced unprecedented challenges and overcame them with ingenuity and persistence. That's the spirit that will drive success in 2022 and beyond.

(This content originally appeared on SupplyChainBrain)

Disclaimer

Echo Global Logistics Inc. published this content on 22 December 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 December 2021 14:56:02 UTC.