COVID-19 has resurfaced in a fresh wave over the world. China and Germany have also experienced natural calamities. A cyber attack has been launched against important South African ports.
According to corporations, economists, and shipping experts, events have conspired to push global supply chains to breaking point, jeopardizing the fragile flow of raw materials, parts, and consumer goods.
The Delta version of the coronavirus has wreaked havoc in Asia, prompting many countries to restrict sailors’ access to land. In a flashback to 2020, at the height of the lockdowns, this has left captains unable to rotate fatigued crews, leaving nearly 100,000 seafarers stranded at sea beyond their tenure.
“We’re not on the verge of another crew change problem; we’re in the middle of one,” Guy Platten, secretary general of the International Chamber of Shipping, told Reuters.
“Global supply chains are in jeopardy right now.”
Given that ships transport over 90% of global trade, the personnel shortage is causing supply disruptions in everything from oil and iron ore to food and electronics.
Hapag Lloyd, a German container line, described the situation as “very difficult.”
“Vessel capacity is extremely limited, empty containers are in short supply, and the operational situation at certain ports and terminals is not improving,” the report stated. “We expect this to continue into the fourth quarter, but it’s tough to say when.”
Meanwhile, fatal floods in China and Germany have severely disrupted global supply lines that were still recovering from the first wave of the pandemic, jeopardizing trillions of dollars in economic activity.
According to the state planner, flooding in China is limiting coal delivery from mining regions such as Inner Mongolia and Shanxi, just as power plants require fuel to fulfill high summer demand.
The movement of products by road in Germany has slowed dramatically. According to statistics from supply-chain tracking company FourKites, the volume of late shipments increased by 15% in the week of July 11 as the crisis developed.
Companies were scrambling to liberate commodities heaped up in Asia and in U.S. ports owing to a confluence of crises, according to Nick Klein, VP of sales and marketing for Taiwan freight and logistics business OEC Group in the Midwest.
“It won’t clear up until March,” Klein said.
Automobile manufacturers will have to bear even more agony.
The manufacturing sector is in shambles.
Automakers, looking to ship a car across the country Due to difficulties caused by COVID-19 outbreaks, manufacturers are once again compelled to halt operations. Toyota claimed it had to shut down plants in Thailand and Japan due to a shortage of parts.
Stellaris momentarily halted operations at a firm in the United Kingdom due to the need for a significant number of workers to isolate in order to prevent the virus from spreading.
This year, the semiconductor sector has already been hammered by a global shortage of semiconductors, primarily from Asian vendors. The car industry consensus earlier this year was that the chip supply constraint will ease in the second half of 2021, but now some senior executives are predicting that it would persist until 2022.
Raw materials costs for steel, which is used in all of their products, have risen partly due to increasing freight expenses, according to an official at a South Korean car parts manufacturer that supplies Ford, Chrysler, and Rivian.
“When you take in rising steel and shipping expenses, it costs us roughly 10% more to create our products,” the executive said, declining to be identified owing to the delicacy of the situation.
“Although we are attempting to keep our costs low, it has proven to be extremely difficult.” Not only have raw material costs risen, but container shipping expenses have also risen dramatically.”
Electrolux, Europe’s largest home appliance manufacturer, issued a warning this week about deteriorating component supply issues that have slowed manufacturing. The delivery of equipment needed to develop stores is being hampered by supply-chain delays, according to Domino’s Pizza.
– The United States and China are at odds –
Supply networks are buckling in the United States and China, the world’s economic engines, which account for more than 40% of global output. This might cause a global economic slowdown, as well as higher pricing for a variety of goods and raw materials.
The release of data from the United States on Friday coincided with a growing belief that growth will drop in the second half of the year following a strong second quarter powered by early immunisation success.
“Short-term capacity concerns continue to be a concern, limiting output in many manufacturing and service sector companies while simultaneously driving prices higher as demand exceeds supply,” said Chris Williamson, IHS Markit’s senior business economist.
This month, the firm’s “flash” reading of U.S. activity fell to a four-month low as businesses grapple with raw material and manpower shortages, which are fueling inflation.
It’s an unwanted conundrum for the US Federal Reserve, which meets next week just six weeks after removing the coronavirus from its list of economic concerns.
The Delta variation, which has already compelled European central banks to rethink their policies, is fueling a new uptick in U.S. cases, with inflation well beyond estimates.
– We need to restock the stores –
According to industry insiders, ports throughout the world are seeing levels of congestion that haven’t been seen in decades.
On Wednesday, the China Port and Harbour Association stated that freight capacity remained limited.
“A comeback of the epidemic is affecting the manufacturing industry in Southeast Asia, India, and other places, pushing some orders to flow to China,” it added.
Last weekend, Union Pacific, one of two major train companies that transport freight from West Coast ports interior in the United States, announced a seven-day stoppage of cargo shipments to a Chicago hub where trucks pick up the products.
According to experts, the endeavour, which intends to relieve “severe congestion” in Chicago, will put strain on ports in Los Angeles, Long Beach, Oakland, and Tacoma.
This week, a cyber attack attacked the South African cargo ports of Cape Town and Durban, causing further delays at the terminals.
As if that weren’t enough, the official health app in the United Kingdom has advised hundreds of thousands of workers to isolate after coming into touch with someone who has COVID-19, causing retailers to warn of a shortage and some gas stations to close.
Richard Walker, the managing director of Iceland Foods, took to Twitter to advise consumers not to panic buy.
He wrote, “We must be able to supply retailers, stock shelves, and deliver food.”
