Escalating global supply chain problems, threatening economic recovery

worldwide supply chain bottlenecks They feed off of each other, with ingredient shortages and rising prices for important raw materials putting pressure on manufacturers around the world.

Supply shocks are already showing signs of stifling recovery in some areas.

Part of the problem is the out-of-sync global economy with the pandemic, restrictions, and recovery. Factories and retailers in Western economies that have largely emerged from lockdowns are eager for finished products, raw materials and components from old suppliers in Asia and elsewhere. But many countries in Asia are still In the midst of lockdowns and other restrictions related to the coronavirus, limiting its ability to meet demand.

Meanwhile, the global labor shortage, often as a result of people Leave the workforce During a pandemic, it puts more obstacles in the way of producers.

The bottlenecks are expected to constrain industrial production well into the next year, hurting a sector that until recently had supported the global recovery. Global industrial output rose above its pre-crisis level in early 2021, but has stagnated since then, according to the Kiel Institute for the World Economy, a German think tank. It recently lowered its forecast for global economic growth this year to 5.9% from 6.7%, due in part to supply chain issues.

Workers check vaccination certificates and Covid-19 test results at a checkpoint in Ho Chi Minh City, Vietnam, on October 7.


Mika Elan / Bloomberg News

The supply chain knot has helped drive inflation to its highest levels in decades in the United States and parts of Europe, affecting consumer spending. Already high inflation rates are putting pressure on central banks, including the Federal Reserve, to start tapering aggressive pandemic stimulus policies, presenting yet another headwind to global growth.

It is already Too late to save the entire Christmas retail season In many cases, as overcrowded global transportation networks limit supply – right down to home decor. “If I can give consumers one piece of advice right now, it is to find and buy your Christmas tree early,” said Jamie Warner, executive director of the American Christmas Tree Association.

At the heart of the global stalemate lies China, the world’s largest trading country.

Arriving ships often have to quarantine for a week or more before they are allowed to dock. Disruptions at customs and port services are adding to delays. The more ships wait on the inland side in Chinese ports, the longer it will take to start cruising again from China to the rest of the world, waiting for China-made electronics, clothes and toys.

Earlier this year, shipping goods from China to South America cost more than five times as much as shipping goods from China to South America compared to the pandemic downturn last year, according to data from the United Nations Conference on Trade and Development. Shipping rates have doubled on the more smuggled China and North American route.

Outside of China, the shutdown of Covid-related factories in Malaysia has affected chip supplies for German carmakers in The semiconductor market has already hit Because of outages in Texas, Japan and Taiwan. Supply chain specialists said the shutdown in Vietnam has caused problems for Australian importers.

A container ship set sail for Sydney on the 1st of June.


David Gray/Bloomberg News

In Indonesia, mining companies want more trucks to meet the world’s growing demand for coal and minerals. However, the waiting list for new trucks to be delivered is nine months, producers say. Their supply chain problems make it difficult to provide fuel and materials that would help solve supply problems elsewhere, reinforcing bottlenecks.

Strikes and Covid-19 cases among port workers in Australia have curtailed operations. Passenger flights into the country, which were an option for air cargo companies, are still mostly grounded.

“If he wasn’t on the water four weeks ago, he wouldn’t be here at Christmas,” said Marcus Carmont, CEO of TMX Global, a Melbourne-based supply chain consultancy. “The jailbreak card to use a plane isn’t really a lever you can pull off.”

China has added to the pressure by imposing restrictions on electricity use as a result of efforts to tackle climate change. The northwestern province of Shaanxi is one of the world’s largest producers of magnesium, a relatively low-cost mineral that electric car battery makers are increasingly turning to as the demand for electric vehicles increases.

Last month, an economic planner in one of the magnesium hubs in Shaanxi ordered several producers to halt or cut production to meet the region’s 2021 targets to reduce energy use, according to a trader and Chinese media accounts in a government notice. The domestic price of magnesium in China was more than 60% higher in August than in January, according to industry data.

Magnesium deficiency is one of the many reasons that may prevent consumers from finding the vehicle they want around the world.

New Ford F-Series pickups stocked a lot during a semiconductor shortage in Sparta, Kentucky, on July 16.


Jeffrey Scott Dean/Bloomberg News

Noriyuki Umezawa, Director of A


The dealership in the Tokyo suburb of Kashiwa said he was telling customers that they would have to wait at least four to five months for delivery of popular models such as the CX-8 crossover SUV.

Umezawa said more people have shown interest in buying a car since the country lifted the state of emergency on October 1 thanks to a drop in Covid-19 cases. “Now we don’t have cars to sell,” he said.

Rakuten Mobile, a unit of a Japanese e-commerce company

Rakuten مجموعة group a company

Which is trying to establish itself as a nationwide mobile operator, had been hoping to offer an improved service this fall. A spokeswoman said 10,000 of its base stations that provide fast data downloads cannot operate because the company cannot connect chips to its antennas.

Germany’s auto industry, which accounts for a large part of the country’s industrial production, has been laying off workers in and out of the country throughout the year as the supply of chips has ebbed and flowed. Automakers have prioritized the production of high-margin cars in an effort to mitigate the damage to profits through lost sales.

AlixPartners, a global industry advisor, said last month that the global auto industry would lose 7.7 million vehicles worldwide, nearly 10% of projected production in 2021, as a result of chip shortages. It added that the loss of production and sales is expected to cost the global auto industry $210 billion in lost revenue this year.

Automakers are also facing disruptions to resin and steel supplies, says Mark Wakefield of AlixPartners’ industrial and manufacturing practices.

The number of semiconductors in a modern car, from the ignition to the braking system, can exceed a thousand. As the global chip shortage continues, automakers from General Motors to Tesla are having to adjust production and rethink the entire supply chain. Illustration/Video: Sharon Shea

In July, new car sales in France fell by 35%, the largest drop in Europe, while sales fell by 25% in Germany, 29% in Spain and 19% in Italy. In the UK, new car sales fell 30% in July. The decline continued in August when sales of new cars across Europe fell 18% to 724,710 vehicles.

“We are not limited by demand, we are limited by supply,” Daimler AG CEO Ola Källenius said in early September, adding that chip supply pressure will affect third-quarter sales and will appear in 2023.

The German economy is more dependent on manufacturing than many of its European peers. The federal statistics agency said Thursday that industrial production there fell 4% in August from the previous month, leaving output 9% below the pre-pandemic level. It added that the weakness was driven by the decline in the production of vehicles and their spare parts.

An employee at a new semiconductor manufacturing plant Bosch in Dresden, Germany, on May 31.


Jens Schluetter/AFP/Getty Images

Economists say manufacturers’ supply constraints are squeezing margins and driving up consumer prices. More than a quarter of companies have had to reduce or even stop production, according to a recent survey by the Federation of German Chambers of Industry and Commerce.

In Sweden, the economy contracted 3.8% in August from the previous month, pushing production below its pre-pandemic level, according to data from the Swedish Statistics Office.

Manufacturing production fell in one month as Volvo was forced to halt production of cars due to a shortage of semiconductors. “The recovery in Sweden is at an all-time high, and the near-term outlook is not as rosy as it seemed a few months ago,” said David Oxley, an economist at Capital Economics.

In the UK, Glasgow Distillery was set to launch a long-running scheme of Scotch whiskey in the US when supply chain problems began affecting nearly all parts of its business, forcing it to delay the move.

A whiskey maker is finding it more difficult to get the timely supplies of bottles, labels and cartons, which are essential for bottling individual malts, according to its co-founder Liam Hughes. What took six weeks to secure can sometimes take six months, and prices are higher.

“Some of our suppliers have reported increases of 10%,” he said.

Whiskey barrels await filling at Glasgow Distillery Co.


Glasgow Distilling Company

When the Glasgow-based company can get supplies, it will have to wait longer to move to the distillery. Mr Hughes said that once the bottles are ready, global shipping congestion makes the cost of transporting them from Britain to the US five times higher.

As of Thursday, there were 497 large container ships waiting to dock outside ports in Asia, Europe and North America, and delays in arriving at US and Canadian ports from the Far East increased from 14 hours in June of 2020 to nearly 13 hours. September days this year, according to eeSea, which provides data on the container market.

this summer,

T&G International Ltd.

, one of Australia’s largest suppliers of the fruit, has had containers of apples waiting in New Zealand ports for up to four weeks to find a ship to take them to Los Angeles. The company typically ships about 800 40-foot containers of apples to the United States annually.

With container ships held out of ports, T&G diverted some of its shipments to refrigerated carriers, which the company had to lease with other local exporters. These refrigerated vessels can moor in parts of the port that container ships do not, allowing them to avoid some of the long delays.

It’s not good and it will take until later next year,” said Simon Bell, T&G’s director of logistics.

write to Chun Wei Yap in, William Boston in and Alistair MacDonald in

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