Inventory Excess – Inflationary Pressures On National Supply Chains
While most citizens and investors worry about the effects inflation has on pricing and consumer demand, there is a persisting worry that lives in the supply chains of companies throughout the nation. Large excesses in inventory have plagued the supply chains of tens of thousands of companies as previous oversupply and dwindling demand keeps warehouses bloated. With high inflation affecting the storage costs of maintaining such large amounts of inventory, experts now believe that these destructive costs will begin to eat away at the bottom line. Expected to begin
this next earnings cycle, Wall Street is preparing to see weakened margins from several of the country’s recognizable names.
When seeing the perspectives of warehouse managers, the deeper story doesn’t sound any more appetizing. Only 36% of supply chain managers believe levels will normalize throughout the second half of 2023, with the other 64% holding a more pessimistic view. Another 36% believe warehouses will continue to hold excess inventory into 2024, and 23% say there is too much uncertainty to make a prediction. Nevertheless, investors will want to see whether the effect of these warehouse gluts is as significant as reported, or if companies will surprise several once again this month with their quarterly earnings reports.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.
