Ingram's May 2023

that required semiconductors and elec trical components, one-fourth origin- ated with groceries and agribusiness. Inflation was soaring as a worrisome business consideration for those com panies, but for the first time in years, across 12 sectors, every executive cit ed supply chain as reason for concern. COVID-19, by contrast, remained on the radar of only 9 percent of respondents. Still reeling from the impact of the pandemic, global supply chains took another shot to the body with Russia’s military invasion of Ukraine in February 2022. The agriculture sector went nuclear with the onset of war between two of the world’s five biggest wheat exporters— Russia at No. 1, and Ukraine at No. 5. Almost overnight, futures prices soared, peaking at $12.77 by May 17. Since, then, other nations have filled the expected production gap—more than filled it, actually, sending prices into a free fall that took futures below $6 on May 2 of this year. Similarly, Ukraine was No. 4 in corn exports, and Russia No. 7 in 2021,

and the conflict sent prices past $8.16 a bushel in late April 2022; by this May, corn had fallen to $6.30. Manufacturing and construction are worlds away from ag production, but similar trends have played out. On the construction side, the great lumber spike of early 2021 saw prices go strato spheric to an all-time high of $1,481.50 per 1,000 board feet on May 4. Two years later, they stood at $341, barely higher than their pre-pandemic levels. Copper, which plunged below $2.20 a pound amid fear of a global depression early in the pandemic, more than dou bled to $4.47 over the next two years, fell back, then regained ground at slight ly over $4 early in May. None of which is to say that con struction has moderated its post-pan demic surge. Surveying by the Associ ated Builders and Contractors showed construction material costs rose 1.3 percent in January 2023 alone, reversing a recent pullback. That left prices 4.9 percent higher year-over-year, and while that was the smallest annual increase

since January 2021, construction mate rials remain significantly pricier than before the pandemic—by a whopping 37.7 percent. All things considered, says Brunk, there are reasons to feel positive about where supply chains and delivery sys tems are headed. “There is still some over-ordering, and bottlenecks that force companies to over-hoard, then they have to pay to store it all. That’s not good for anybody, and the customer picks up the tab,” he said. “Companies themselves created a bit of the issue, from a bottleneck perspective, because some really got burned by not having enough materials on hand in 2020 and ’21. That’s human nature,” he said. “Now, we see the pendulum swing the other way. We saw a ton of pre-im ported orders before the peak in 2022, and that created nearly zero vacancies across most markets in the U.S. It’s not taking six months to get ocean con tainers in, pricing is more in line with 2018, and that makes things work a lot smoother.”

The Industries Most Concerned About the Supply Chain

% of earnings calls mentioning supply chain

2018

2019

2020

2021 100%

2022 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

1. Recreational Vehicles 2. Computer Hardware

38% 72% 40% 53% 22% 76% 60% 78% 41% 41% 82% 79% 23% 41% 76% 64% 32% 45% 33% 59%

43% 45% 52% 55% 41% 71% 58% 71% 55% 69% 55% 71% 17% 51% 50% 45% 36% 48% 24% 52%

91% 77% 76% 77% 90% 95% 80% 85% 72% 71% 45% 87% 43% 68% 86% 51% 63% 80% 49% 63%

97% 97% 95% 95% 92% 90% 90% 80% 79% 72% 84% 77% 81% 93% 85% 78% 86% 61% 82%

3. Solar

4. Fashion

5. Grocery Stores 6. Discount Stores

7. Consumer Electronics 8. Electronic Components 9. Aerospace & Defense

10. Beverages

11. Conglomerates 12. Packaged Foods 13. Construction

95% 94% 94% 93% 91% 91% 90% 90% 89%

14. Chemicals

15. Specialty Industrial Machinery 16. Electrical Equipment & Parts

17. Automotive

18. Semiconductors

19. Telecoms 20. Farming

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I ng r am ’ s

Kansas City’s Business Media

May 2023