CoStar Insights

Pandemic Has Exposed Weak Links in Global Supply Chains, CoStar Analysts Report

by CoStar Analyst Team | Jun 03, 2020

covid supply chain

The effects of COVID-19 have exposed systemic weaknesses in global supply chains, particularly those depending solely on Chinese manufacturing, according to a snapshot created by the CoStar analyst team.

These weaknesses will likely have lasting and far-reaching impacts for manufacturers, domestic markets and industrial investors looking to capitalize on the shifting composition of supply chain management. 

Coronavirus Reveals the Weak Links in Global Supply - Chart1

Spurred by a number of concerns, including rising wages, total cost considerations and an extended trade war with China, the average monthly value of imports from China fell more than 6% (nearly $2.6 billion) between 2015 and 2019. At the same time, other locales are looking to step up manufacturing capabilities on their shores.

As a result, expect a greater focus on building redundancies and increased resiliency into supply chains at all levels, with companies diversifying and either choosing to onshore back to the U.S. or reshore to Asian nations or regional trading partners. 

For domestic industrial investors, it may be beneficial to temporarily increase inventory due to the unforeseen shortages in consumer goods. Over the longer term, the reality of increased reshoring rather than onshoring should reinforce already established national and regional distribution hubs. This should increase stability of supply chains globally and help protect industrial assets across the U.S. from future disruption.

Click HERE to learn how CoStar expert analysis can help power smart supply chain management strategies.

 
 

This post may include "forward-looking statements" including, without limitation, statements regarding CoStar's expectations or beliefs, which are based on our current beliefs and various assumptions concerning future events and circumstances that are subject to change.  Actual results and events may ultimately be materially different.  All forward-looking statements are based on information available on the date published, and we assume no obligation to update these statements.  You should not construe this post as investment, tax, accounting or legal advice.