Fresh COVID-19 Cases Shatter Global Supply Chains

A recent upsurge in new COVID-19 cases across Asia aggravates supply chain blockages in the most significant source of manufactured goods.

Asia had dealt with the previous COVID-19 waves better than most parts of the world, but the fast-spreading Delta variant is hampering the supply chains of the factories and ports in many countries.

As per estimates by United Nations, about 42% of global exports come from Asia. As such, the battered supply chain in the region can cause ripple effects in places like Los Angeles or Rotterdam.

Moreover, earlier reports have shown that problems in the Asian ports can impact the delivery of products in other parts of the world. It subsequently, is raising prices for the consumers.

The rise in Covid-19 cases worsens an already tormented year for exporters as they are already facing problems with sky-high costs caused by a shortage of containers and raw materials.

Deborah Elms, the executive director of Asian Trade Centre, stated, ‘Delta COVID-19 variant will mostly disrupt trade across Asia. Though many markets were lucky and handled COVID-19 well, with COVID-19 now at its rampant, the effective handling will no longer exist.’

IMO Emissions shipping representation
Image Credits: IMO

Recently the third busiest container port of the world partly shut down in China. Also, factory executives stopped producing electronics, clothes and many other products in Southeast Asia due to an increase in COVID-19 cases.

As per Natixis, Indonesia, Malaysia, the Philippines, Vietnam, and Thailand account for a total of 5.7% of the exports in the world. These markets can significantly impact massive economies like U.S. and China, and specifically in electronics.

The managers saw a dip in manufacturing activities across Southeast Asia as exporters struggle to keep their factories running. It stands as a sign that the pandemic has caused a dent in the region’s resilient trade.

Lane Lai, the director of effective foreign trade at CNC Electric, stated, ‘The primary major challenge is the sky-rocketing international shipping costs.

They are doubling and even tripling of the amount that prevailed in pre-pandemic. Last year, when the pandemic was high, we thought the situation would be short term. However, seeing the present situation, I don’t see any substantial change soon.’

Pham Hong Viet, the chairman and CEO, stated, ‘Things are turning worse as several factories of the southern provinces have stopped operations. Also, the companies on the northern side are struggling to continue production. This has severely affected the supply chain of the country.’

Reference: indiatimes.com

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