Predictions about a crisis in 2023 are gaining more and more robustness and evidence. Some signs are the intensified war in Eastern Europe, the ongoing lockdowns in China, and rising inflation in the US. If you want to know what can happen, keep reading this article.
Crisis in 2023
The war between Russia and Ukraine is already causing great disruptions in global logistics. For instance, some ports are blocked, which means that alternative routes must be taken to transport goods and raw materials. Moreover, Russia and Ukraine are exporting much less than they used to, and the global market is feeling the consequences. The wheat price increased worldwide, as the two countries together produce 99,393,398 tons of this grain per year.
To complicate things further, there is the pandemic, responsible for a great recession in many domestic economies throughout the world. So, it is possible to say that most countries are still fighting to recover their economies. The possibility that the US economy facing a recession is scaring the global economy.
Determining whether there will be an economic recession is complicated, after all – as the saying goes – if you put three economists in a room, you get four different opinions. However, conditions indicate that world economic growth will be between 0.1% and -0.4%. Also, the Deutsche Bank already predicts a recession in the USA for the year 2023.
Why Recession in 2023?
According to the press release by The World Bank posted “Risk of Global Recession in 2023 Rises Amid Simultaneous Rates Hikes”, banks around the world have been raising interest rates to bring global inflation back down. However, despite raising interest rates as have never been seen before, they might need to continuously do this next year. Investors expect central banks to raise global monetary-policy rates by about 4% next year, which means an increase of more than 2% over the one that was in 2021. So, global inflation won’t be easy to cut. To cut it with their targets, central banks have to raise interest rates by an additional 2% points. However, if they do this, the global market would suffer a 0.4% contraction in per-capita terms. In other words, there would be a technical global recession.
How to prepare for the 2023 crisis
If there would be a global recession, no matter how big your business is, it will still suffer. Something that could help your business survive will be to improve its efficiency. Nowadays, technological innovation holds great promise for improving performance and facing disruptions. Besides, artificial intelligence and machine learning can also contribute to get more efficiency and obtain better forecasting about your company and your supply chain.
Combining these technologies in the planning of logistics processes will allow you to optimize your performance, reducing risks and costs. Nevertheless, digital transformation cannot be done by halves, you must increase your integration, visibility, and communication within your company’s supply chain areas. For instance, warehousing, production, transportation, and points of sale need to communicate directly with each other. The management needs to be able to access the record of these communications for audits.
About the generation of documents: there must be no room for human error, and they need to be streamlined. This way, no time is wasted on bureaucracy and no cargo is held in ports because of documentary details. In the same way, the condition and location monitoring of your cargo must be 24/7 to pass on security to customers and investors. There are many functions to be fulfilled within a global supply chain to protect yourself from the crisis, but at the same time, it is risky and inefficient to use multiple disconnected tools to fulfill them.
Therefore, if you achieve to make your business more efficient by adding digital technology and integrating your supply chain partners, you will have more chances to survive the crisis in 2023. If you are thinking “How can I achieve this digital transformation?” you are in the right place. Start being proactive and be ready in 2023!
