Global supply chains are being battered by fresh Covid surges

  • 16-Aug-2021
  • Global supply chains are being battered by fresh Covid surges

Asia’s renewed surge in Covid-19 infections is compounding supply-chain blockages across the world’s biggest source of manufactured goods.

After weathering earlier pandemic waves better than other regions, the fast-spreading delta variant has thrown into turmoil factories and ports in countries that were once among the most successful containing the virus.

The snarls in Asia -- where the United Nations estimates around 42% of global exports are sourced -- risk twisting their way through global supply chains just as shipments would usually ramp up for the Christmas holiday shopping season.

As earlier snags have shown, problems that start in Asian ports can ripple slowly, showing up later as delays in places like Los Angeles or Rotterdam and higher prices for consumers.

The flare-ups also worsen an already tortured year for exporters, with shipping costs sky-high due to a shortage of containers and as raw materials such as semiconductors become pricier and difficult to source amid red-hot demand.

“Delta is likely to significantly disrupt trade in Asia,” said Deborah Elms, executive director of the Singapore-based Asian Trade Centre. “Most of the markets have been fortunate in managing Covid well so far. But as Covid continues to spread, this lucky streak is likely to end for many locations.”

In a sign of those concerns, oil prices extended declines at this week’s opening in Asia as the delta variant’s spread has undermined the outlook for global demand.

In China, the world’s third-busiest container port was partly shut recently, while in Southeast Asia -- among the worst-hit regions -- factory executives have stalled production of electronics, garments and scores of other products.

At stake is an export boom that shielded trade-driven economies during the pandemic and was expected to fuel a broader rebound. The World Trade Organization had forecast Asia to lead an 8% rise this year in global goods trade.

Source : economictimes.indiatimes.com

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