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Pandemic Causes Supply Chains to Look Unhealthy

by: The Knowledge Group

August 20, 2020

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The COVID-19 pandemic has strained our society and its many systems more than anything else in recent history, stretching the economies of countries all over the world to their breaking point. In many areas, these economies have slowly begun to recover even as the virus continues to rage. However, companies across a broad range of industries now find themselves facing one of the biggest challenges that COVID-19 has created: dramatically weakened supply chains.

Grinding the entire world to a halt in order to slow the virus’s spread has come with a heavy cost. Facilities have been forced to close their doors, demand has decreased, and production costs have soared. All of these things are ingredients for a supply chain that is starting to look dangerously unhealthy.

Tyson – a company responsible for producing 20% of the United States’ beef, pork, and chicken – is just one example of a company that is struggling to keep its fragile supply chain intact. As more and more of its facilities have been forced to close, Tyson has struggled to keep up with demand while still seeing their third-quarter profits decline 22% from last year. Unfortunately, many companies like Tyson are now finding themselves in a similar situation where difficulty meeting demand due to crumpling supply chains is coinciding with a drop in profit.

As the world continues to struggle with all of the difficulties that this pandemic has created, the massive blow that it has dealt to the world’s supply chains is going largely undiscussed. However, the impact that these weakened supply chains have had and will continue to have on companies across a broad range of industries is something that the world economy will have to deal with for potentially years in the future, even if a vaccine for COVID-19 is eventually found.

Note: The Knowledge Group continuously produces webcasts on this topic and other hot-buttons issues relating to international trade law to keep you ahead of the curve.

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