The coronavirus pandemic has had detrimental effects on the global economy, impacts that will surely ripple into 2021. Outlooks on the economy and company prospects have remained more positive than negative, though optimism on the global economy decreased from August to September.[i] This perceived forecast unfortunately speaks to uncertainty in the global marketplace. Anemic foreign demand for products produced in the U.S. is hurting capital goods producers, auto companies, industrial suppliers, and many other industries as well. Meanwhile, market volatility is causing chaos in global supply chains. The ability for organizations to respond to these challenges will determine the strategies required to maintain profitable performance in 2021. Partnering with a reliable warehousing and distribution company like Westset Logistics and Distribution can provide the flexibility and dependability your company needs to thrive in 2021.
Economic Forecast
According to the IMF’s October forecast, global growth projection remains at −4.4% in 2020 with growth in 2021 expected to rise by 5.2%, while world merchandise trade volume is forecast to fall 9.2% in 2020. While the global economy is slowly rebounding from the devastating effects of the coronavirus pandemic, the ascent will likely be long, uneven, and uncertain. So, while trade volume growth should rebound to 7.2% in 2021, it will remain well below the pre-crisis trend. Some regions will recover faster than others, as some countries felt the economic impact of the pandemic much stronger.
Exports
The merchandise trade deficit, which is the gap between what the U.S. purchases from other countries and what it sells them, hit a monthly record in August. Americans have resumed buying imported goods from other countries, but foreign countries are not reciprocating. Weak demand from abroad has left U.S. exports depressed. This can be explained by the deep recessions, caused by the coronavirus pandemic, that continue to ravage the economies of countries like Japan, Brazil, India, and European nations. While U.S. output is expected to drop by 4 percent in 2020, Europe will experience a roughly 7 percent decline, according to S&P Global Ratings.
Supply Chains
As the coronavirus continues to wreak economic turmoil around the world, modern supply chains face unprecedented stress. Before the pandemic, the globalized supply chain network was optimized to identify minimum lead times at the lowest possible price. However, the pandemic has shed light on the hidden costs of single-source dependencies and poor flexibility in adapting to real-time shocks. This shift towards more flexibility and multi-level sourcing, will continue to accelerate tremendously in 2021. Given these shifts in supply chains and unprecedented economic export-import scenario, forming key partnerships is more critical than ever to a company’s success. Optimized supply chain capabilities can support more efficient and effective business approaches as well as new business models that translate directly to tangible and measurable business performance improvements.
The Solution
A broad overhaul of our supply chain infrastructure should prioritize reliable partners along every step of the supply chain. Westset Logistics and Distribution is a family-owned warehousing and distribution business poised to serve domestic U.S. and international companies. We provide superior warehousing, distribution and last mile logistics solutions. Partnering with us empowers you with flexibility, trust and accuracy. By working with an expert supply chain partner like Westset Logistics and Distribution, you can access end-to-end transparency that facilitates more opportunities across your network. We understand that these are volatile times, and we are able to adapt to the peaks and troughs of your business cycles. By adapting to the needs of each individual customer we enable you to remain extremely competitive and reliable in your market. For more information on how we can adapt to the changing needs of your company, contact one of our friendly, informative team members here.
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[i] https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-coronavirus-effect-on-global-economic-sentiment#