RSM Canada’s Supply Chain Index worsened to 1.84 standard deviations below zero in January, down from a revised 1.36 standard deviations below zero in December as the omicron variant spread across Canada and the world.
The highly infectious strain of the coronavirus hurt the supply chain more than once, most notably in the way it knocked out the workforce.
Record numbers of workers were out sick, which worsened the bottlenecks along the supply chain. There were fewer truck drivers on the road transporting goods and fewer workers in warehouses stocking and moving inventory.
As a result, we see unequivocal deterioration across all indicators of the Ivey Purchasing Managers Index: increases in delivery time and prices, as well as lower inventory level.
Further challenges lie ahead for Canada’s supply chain. The vaccine mandates for truck drivers traveling between the United States and Canada sparked protests across the country.
But since more than 90% of drivers are fully vaccinated, there was no noticeable slowdown of cross-border traffic at first, hence the vaccine mandate itself unlikely caused major disruptions to the supply chain.
The trouble came when the weeklong border blockades that started in February stopped commercial traffic across some of the most important border crossings between the U.S. and Canada, bringing the auto industry to a halt and added days to transportation time.
We can expect the supply chain index to worsen in February and March, as the remnants of the blockade are resolved. In addition, the global geopolitical conditions will bring yet more uncertainty in the months ahead.