Next test of global supply chain crisis

Date:

The cargo ship will load and unload containers at the Foreign Trade Container Terminal at Qingdao Port in Qingdao, Shandong Province, eastern China on November 11, 2021.

Yu Fangping | Costfoto | Barcroft Media | Getty Images

Ports and businesses have been fighting the global supply chain crisis since the beginning of the year. The industry can now face yet another blow, as the crisis seemed to begin to stabilize. New Omicron Covid Variant..

Per Hong, a senior partner at consulting firm Kearney, says Omicron is “another test of resilience” in an already stressed supply chain.

“The supply chain is still vulnerable to pandemic-related turmoil, and the Omicron variant is not over yet,” said Cyan Fenner, leader of Asian economics at Oxford Economics, in a note on Wednesday. I have. “

Despite many unknowns, Omicron is certainly already under stress and set to be yet another test of the resilience of the global supply chain in the midst of a long healing process.

Per phone

Senior Partner, Kearney

NS The world first noticed a new Omicron variant Late last week, after South African scientists reported the emergence of a strain. The World Health Organization quickly classified it as a “variant of concern” and spread it further. It can be a “very high” global risk.

Since then, the stock has found In the case of England, France, Israel, Belgium, Netherlands, Germany, Italy, Australia, Canada, Hong Kong.

Blockade “knock-on effect”

There are no reports of Omicron in mainland China, but Mr Hong said he is closely watching the Chinese government’s response. Cases emerging in Hong Kong..

“China is expected to double its” zero COVID “policy to prevent incident intrusions in the past, including rigorous port checks including mass blockades of the entire city, forced quarantine, and surveillance of ships and cargo. I am. “He wrote.

Other analysts also warn With the advent of Omicron, China can strengthen its measures against zero covids.

Hong points out that blockade measures in one country have “significant knock-on effects both upstream and downstream to other regions,” as the turmoil caused by Covid’s pandemic at an early stage showed. bottom.

“If this happens, not only will shipping be restricted, but there will be a shortage of key manufacturing components and an increase in backlog of core electronic, automotive and consumer products, depending on the affected region. No doubt, “he said.

Some of the busiest ports in the world are in China. According to data from the World Shipping Council, seven of the top ten busiest ports are in China. Shanghai is number one, Port of Ningbo-san is number three, Shenzhen is number four, and Hong Kong is the eighth busiest port last year.

Indeed, WHO states that it is unclear whether the Omicron mutant will cause more serious disease than other strains such as Delta.

“There are many unclear points, but Omicron [is] Indeed, we are already under stress and are setting it to be yet another test of the resilience of our global supply chain, which is in the midst of a long healing process. “

Omicron could slow back regional export recovery

Most governments in the region are likely to resist imposing strict restrictions, but the bottom line is that supply chains will continue to be under pressure for the duration of the Covid threat.

According to Oxford Economics Fenner, deregulations in Asia have allowed workers to return and the factory to go online again in September.

“Even if more production goes online, there are still logistics challenges, especially not just for transportation as a whole, but for air cargo,” she said. This includes short-term shipping and supply constraints due to “multi-year delays” between new orders and deliveries on vessels.

Globally, less than half of ships arrive on time in 2021, according to Oxford Economics, and delayed ship delays consistently increase delivery times by more than a week. Compared to about 4 days in 2018 and 2019.

According to research firm TS Lombard, Asia’s major exporter, Vietnam, will regain its export share after the “especially serious” third Covid wave. Due to the pandemic, Southeast Asian countries have closed their factories. It’s causing problems for many American companies that have manufacturing facilities there, especially.

But if Omicron throws a wrench on its efforts to restore the supply chain, it could threaten the recovery of exports in the region, TS Lombard analysts said in a note on Monday.

“Most governments in the region are likely to resist imposing strict restrictions, but ultimately, supply chains will continue to be under pressure for the duration of the Covid threat,” they said.

According to Oxford Economics, if Omicron hits the supply chain, its impact on Asia’s gross domestic product is likely to drop by 1.6 percentage points next year.

Next test of global supply chain crisis

Source link Next test of global supply chain crisis

The post Next test of global supply chain crisis appeared first on Eminetra.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Share post:

Popular

More like this
Related

Uniswap: Why Ethereum whales are not the agents needed for a ‘twist of fate’

Uniswap broke into the top cryptocurrencies held by...

Sick Psycho Protesters Scream at Ashli Babbitt Mother at Solidarity Rally (VIDEO)

The left is sick. Earlier today, patriots gathered in Washington,...

DOGE and SHIB Price Analysis for September 24

Disclaimer: The opinion expressed here is not investment advice...