Global Supply Chain Crises Flares Up Again Where It All Began

Global Supply Chain Crises Flares Up Again Where It All Began

China’s stringent rules to curb Covid-19 are about to unleash another wave of summer chaos on supply chains between Asia, the U.S., and Europe. Ports are already snarled, with the $22 trillion trade in global goods facing months of severe disruption.

Beijing’s zero-tolerance approach amid an escalating virus outbreak brings the pandemic full circle, more than two years after its emergence in Wuhan upended the global economy.

Shipping congestion at Chinese ports, combined with Russia’s war in Ukraine, risks a one-two punch that threatens to derail the recovery, already buffeted by inflation pressures and headwinds to growth.

Even if the virus is reined in, the disruptions will ripple globally — and extend through the year — as bunched-up cargo vessels start sailing again.

China accounts for about 12% of global trade and Covid restrictions have idled factories and warehouses, slowed truck deliveries, and exacerbated container logjams. U.S. and European ports are already swamped, leaving them vulnerable to additional shocks.

In the short run, the pileups will mean more costly headaches in the $22 trillion arena for global merchandise trade, which slumped in 2020 and rebounded last year.
For some corporate executives, reeling in far-flung production networks is no longer a patriotic political slogan — it’s a business necessity given all the uncertainty.

Longer queues of vessels seen off China’s coast aren’t helping. The line of cargo carriers has jumped after Shanghai, home to the world’s largest container port, initiated a city-wide lockdown late last month to combat Covid-19 cases.

Source: Economic Times

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