In the headlines: Global supply chain disruptions have plagued almost every industry since the onset of the pandemic, estimated to have cost US businesses alone nearly $1.85 trillion in revenue in 2021, a 22% increase from the year before.
The issue began escalating when lockdowns led to a period of suppressed industrial activity amid a growing demand for physical goods, which left manufacturers and distributors scrambling to ramp up production when restrictions were lifted. In the end, demand still far outpaced supply, leading to a chain of disruptions in how many items – like cars, building materials and many tech gadgets – are made and transported around the world.
“It’s like somebody threw a massive boulder into a lake, and it had a big displacement,” said said Ayeh Bandeh-Ahmadi, principal economist at Transfix on the prolonged effects of the pandemic on the global supply chain . “What we’re seeing is the ripples of the remnants of that massive event.”
And while some experts say the peak of the crisis is behind us, many industries are still feeling the impact of raw material shortages, now exacerbated by the Russia-Ukraine war.
This is happening in the context of blockchains gaining momentum as a way to digitize logistics, with companies across a multitude of industries exploring how the technology can be used to streamline their supply chains.
The chart above shows big name institutions at various stages of implementing blockchain tech, many of them specifically looking to it for their logistics process.
Why it matters: Blockchains would allow transparent, efficient and immutable end-to-end tracking of physical assets, making the entire logistics process less prone to prolonged disruptions.
Between the lines: Supply chain disruptions as a result of the pandemic and the war are expected to persist for the next several years, while similar situations may become more common in an increasingly globalized world.
“Supply will likely play catch up for some time, particularly as there are bottlenecks in every link of the supply chain—labor certainly… but also containers, shipping, ports, trucks, railroads, air and warehouses” said Tim Uy of Moody’s Analytics earlier this year.
And even though the pandemic caused the most widespread supply chain crisis in history, significant inventory shortage and excesses as a result of faulty logistics are nothing new, especially in the manufacturing sector –which makes the entire system ripe for change.
Moreover, logistics related cybersecurity breaches have been hitting all-time highs since 2020, with cybercrime estimated to cost the world more than $10 trillion annually by 2025, which is equivalent to the GDP of the third biggest economy in the world after the U.S. and China.
Still, blockchain technology is on its way to become the primary way of securely storing and distributing data, with many experts calling wide scale adoption a matter of when and not if.
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