GRAND RAPIDS, Mich. — A supply chain issue could be on the horizon— a local expert explains how those global issues could impact us here in West Michigan.
AAA shows 3.6 million Michiganders are expected to travel this holiday weekend. According to GasBuddy, national gas prices are up slightly compared to last year.
The Seidman College of Business at Grand Valley State University Associate Dean explains the price jump has a lot to do with rebels shooting missiles near the Suez Canal.
"Major shippers like Maersk, like BP, have now decided not to take their ships to the Suez Canal, but sail them through the bottom of Africa, which can add a week to the trip," GVSU Associate Dean of The Seidman College of Business Paul Isely said.
The expert has been studying supply chains for more than 30 years.
Isely explains a source he looks to is the New York Federal Reserve because it tracks supply chain pressures with bimonthly reports.
The data shows that near the end of 2021, the pressure started to drop from its high during the pandemic, with a few exceptions that continued until the summer of this year.
The New York Federal Reserve currently shows growing supply chain pressure. Isely says if this continues, we could see an impact beyond increasing gas prices. In the worst-case scenario, he says, Michiganders could see inflation start spiking back up.
"That nice trend that we've had on inflation over the course of the last six months might be bottoming out before we want it to bottom out. And this would be a supply-side issue," Isely said. "The Federal Reserve can affect the demand side, but it can't affect the supply side. Supply-side issues in the supply chain are much harder to deal with."
Isely says another current issue is a drought near the Panama Canal, forcing a limited number of ships to go through, but the number is expected to go up at the beginning of 2024.
