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2022 look ahead: How long will supply chain issues persist in the new year?

This story, originally published in The Dallas Morning News, is reprinted as part of a collaborative partnership between The Dallas Morning News and Texas Metro News. The partnership seeks to boost coverage of Dallas’ communities of color, particularly in southern Dallas.

About 80% of Texas businesses told the Dallas Fed they see no improvement or even worsening problems before the supply chain normalizes.

By Maria Halkias

Port of Los Angles
The Port of Los Angeles broke a record for cargo processing of any port in the Western Hemisphere in 2021, handling about 13% more containers than its previous record in 2018.(Marcio Jose Sanchez / ASSOCIATED PRESS)

Texas businesses see nagging supply chain issues worsening in 2022 before they get better and that sentiment has been a moving target, according to monthly surveys by the Dallas Federal Reserve Bank.

“In June, when we asked when the supply chain will normalize, businesses believed that would be now,” said Christopher Slijk, Dallas Fed economist.

Now the consensus is the end of 2022, Slijk said, and that’s not just a hunch.

The responses are based on experiences such as unfilled orders, which 17% more companies said they had in November than in October.

Just over one-third of businesses were experiencing supply disruptions or delays in February but that soared to 70% by November, Slijk said. Retailers were even worse off, with 93% reporting disruptions.

About 80% of Texas businesses told the Dallas Fed they see the supply chain showing no immediate improvement or even worsening significantly. Two-thirds of companies said they expect the supply chain to return to normal in at least seven to nine months and 25% expect it to take more than a year.

Retailers were more pessimistic, with 72% saying at least seven to nine months and more than 30% saying it’s going to take more than a year.

The Dallas Fed surveys business owners and executives operating companies that represent a cross-section of the economy in retail, manufacturing, general and professional services and hospitality.

Surveys of Texas businesses
Surveys of Texas businesses by the Dallas Fed show continuing supply chain concerns heading into 2022.(Federal Reserve Bank of Dallas)

The pandemic’s well-chronicled supply chain issues resulted from multiple forces, as rising consumer demand and clogged logistics networks were worsened by labor shortages caused by the health crisis at factories in China and Vietnam as well as at ports, warehouses and stores in the U.S.

The focus has been on the Port of Los Angeles, which broke a record for cargo processing of any port in the Western Hemisphere in 2021, handling about 13% more containers than its previous record in 2018.

Throughout retail, from small local businesses to big box chains Walmart and Target, orders were increased to be in stock for the holiday shopping season.

Texas also contributed to the supply chain woes when the state’s electric grid failed during the February freeze and took out petrochemical plants. That caused lingering disruptions in the production of everything from house paint to restaurant to-go boxes and jacked up prices for a host of petrochemical-based goods.

Twitter: @MariaHalkias

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