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.
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.
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