Morgan Stanley: supply chain disruptions will be more fully resolved within the first half of 2022

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That’s the base case the investment bank laid out in a recent report assessing the global supply chain, its risks and chokepoints.

This year’s supply chain crisis has hit companies hard as bottlenecks built up and industrial production failed to meet a post-pandemic spike in demand. Energy shortages in China and Europe, as well as Covid-related lockdowns, have contributed to the huge squeeze in supply chains.

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Supply chains remain vulnerable, especially as the world is still assessing the risk of new omicron strains, Morgan Stanley said.

“However, orders have surged amid anxiety about sourcing product, thus inflating backlogs and setting the scene for a sharper than-expected short-term unwind, particularly for consumer electronics and segments facing demand destruction risk,” the bank’s analysts wrote in the Dec. 14 report.

Logistics costs will remain “significantly higher” and will be “persistent through 2022,” Morgan Stanley predicted. “Quarantine and travel restrictions are unlikely to be eased for key transcontinental routes in a coordinated fashion through 2022, with little new capacity until late 2023.”