The global supply chain is in chaos!

Since the beginning of 2020, due to the repeated outbreaks of the new crown pneumonia epidemic around the world, the closure or delay of many ports around the world, the frequent occurrence of extreme weather, the shortage of chips and labor, the global supply chain has become chaotic, and various industries have been deeply affected.

The epidemic has repeatedly hit the global supply chain

Since the outbreak of the new crown pneumonia epidemic, the number of new confirmed cases worldwide has rebounded several times every week.
As of the end of August this year, nearly 40% of the population in developed economies have been fully vaccinated, while the proportion of vaccinations in emerging market economies is 11%, while very few people in low-income developing countries have been vaccinated.
Charles Cox, strategic consultant of Cox Pacific Consulting Agency, believes: "Many supply chains exist in advanced economies and many emerging markets and developing economies. Considering that the vaccination rate in developing countries is far behind that in Europe, America and China. The vaccination rate, we will be busy responding to the epidemic and infection for a long time, and these will continue to have an impact on the supply chain."

Port closures or delays will continue to impact the supply chain

The COVID-19 mutation will continue to cause port closures or delays. As an important transit point in the international shipping market, Singapore has been affected by the epidemic in many Southeast Asian countries. The volume of goods has surged, the port has been congested, the rotation schedule has been extended, and the cost of shipping has doubled.
Recently, some shipping routes have increased by nearly ten times, and it is still hard to find a box. Container ship owners and operators have made amazing profits in the past few months.
Moreover, because many seafarers around the world are not vaccinated, ports in some places may be closed again, which will continue to impact the supply chain. However, the leaks in the house have been raining continuously. This year, extreme weather occurred frequently across the world, which has led to food shortages in many countries.

Supply chain disruption is becoming the new normal
U.S. hurricanes destroyed power lines in Louisiana and Mississippi, leaving nearly 1 million people lacking electricity and drinking water; Germany’s extreme rainstorms broke records, causing floods and more than 100,000 households were cut off from electricity and gas; Brazil suffered its worst drought in 91 years. Seriously affect hydropower and agriculture.

Frequent extreme weather, coupled with the intertwined effects of factors such as the epidemic, have caused the global prices of various commodities such as beef, wheat, sugar, and vegetable oil to continue to rise. Although the supply chain has been struggling to keep up with demand, supply chain disruption is becoming the new normal.

According to the monthly food price index released by the United Nations Food and Agriculture Organization on September 2, global food prices have risen by nearly 33% over the same period last year, and have risen by more than 3% since July. Overall, this year's UN Food and Agriculture Organization's index shows that food prices have reached their highest level since 2011.

In the past year or so, suppressed demand and supply chain bottlenecks have pushed up prices of various commodities. From daily snacks to kitchenware to food, from raw materials to finished products, the supply of all kinds of commodities has been affected.
Whether it is Taco Bell, Starbucks, or fast food chains such as KFC and McDonald's, they are all facing large-scale supply chain problems.

KFC previously announced that certain items on the menu were no longer available to British customers. Now, the fried chicken chain says it can’t promote its breaded chicken fillets on American TV because there will be a continuing shortage of chicken.
Behind KFC's "no chicken to fry" is the labor shortage of slaughterhouse workers and the tight supply throughout the year in the poultry industry, making it difficult for KFC and other fast food chains to stock enough chicken. Fast food chains are only facing the tip of the iceberg of large-scale supply chain problems in the global catering industry.
The chain reaction of the damage to the supply chain is not only reflected in the shipping and food supply, the shortage of chips also affects the development of the global industry.

The global chip supply chain is tight

Since the second half of last year, the global integrated circuit manufacturing capacity has continued to be tight, and various industries have successively experienced the problem of "core shortage", which has had a certain impact on the development of the global industry.
There are two main reasons. One is that the global outbreak has caused manufacturing companies to generally slow down their capacity expansion plans, which has caused a mismatch between capacity supply and demand; the second is that the epidemic continues to repeat, causing some countries and regions to shut down some The chip production line has resulted in a reduction in output, causing some chips to be cut off.
Especially car manufacturers that rely heavily on chip factories. The epidemic has caused a global shortage of chips, which has caused a reduction of 5.85 million vehicles in production, of which 1.122 million vehicles have been reduced in the Chinese market. It is estimated that in 2021, the global car production will be reduced by more than 7 million, and this effect will continue until next spring.

The chaos in the global supply chain caused by the epidemic once again proves that the world economy is closely connected, and any delays and shortages in global trade will affect almost all places. Solving global supply chain problems also requires returning to economic common sense.