According to an analysis by IHS Markit, the supply chain delays seen this year will carry on into 2022 and possibly 2023. The logistics crisis is worsening due to the economic rebound, staff shortages, and the overstrain in transportation systems.
Q2 2021 hedge fund letters, conferences and more
Supply Chain Delays Effect
As reported by CNBC, the extending of supply chain disruptions explains “why online purchases are taking longer to arrive, why there’s vacant space on store shelves, and why the furniture you ordered is taking months instead of weeks to arrive.”
The immediate effect amid rising online shopping is the menacing inflation caused by little product availability in stock, with some items hitting record prices in more than a decade.
Also, according to the latest PMI survey of global manufacturing by IHS Markit, the delays in delivery times “are the most severe ever recorded, going back a quarter century,” with more than 20 million containers stacked up in ports around the globe.
That number accounts for nearly half of global trade containing several items ranging from smartphones, laptops, household products, and auto parts.
The crisis has brought to light how the world’s economy gravitates around China and its manufacturing prowess –especially goods that are shipped from neighboring countries– amid the increasing complexity of supply chain and logistics.
“Today, 42% of all the containers arriving in the U.S. come from China, which is home of seven of the 10 largest container ports in the world,” CNBC informs.
Collateral Damage
Experts agree that the sheer speed at which the economy is recovering is increasing supply chain delays, as outbound containers in the Asian region have soared month by month since August 2020.
“IHS Markit now projects 2021 global GDP growth of 5.7%, compared to the 3.4% decline in the Covid shut-down year 2020. That has added to the pressure on the system.”
According to Bindiya Vakil, CEO of supply chain monitoring firm Resilinc, disruptions due to supply chain delays and shortages were up 638% in the first half of 2021.
Further, “Covid has resulted in a higher number of fire incidents at factories and warehouses.” The root cause, she says “is the absence of staff at factories carrying out normal day-to-day preventive cleanups.”
Within Resilinc’s automotive client network, factory fires more than doubled between 1H2020 and 1H2021, going from 275 to 584 reported incidents.
The whole data encompasses more than 1.7 billion news feeds concerning potential and existing supply chain disruptions from 4.2 million sources in 100 languages.
Updated on
