Supply Chain Disruptions Continue
By Osama Rizvi for Primary Vision
Christmas is around the corner but the global supply chain disruptions haven’t improved still and it looks like it will take a long time for this issue to be resolved, executives around the world from various industries now agree too. There is congestion on ports, businesses are finding it hard to keep up with the demand and prices paid continue to increase. Traders are expecting to see two rate hikes by the Fed next year or if conditions worsen, may be more. All of this means, among other things, one thing: increased prices for the consumers. Economists have warned that inflation can be “higher for longer” contrary to Fed’s narrative.
Empty shelves can be seen across the U.S. and also in other parts of the world too. This is because of rising consumer demand but also the shortage of workers. One of the reasons for this the extent of fully vaccinated people across the supply chains. For instance, only less than a third of world population has been completely vaccinated and 98 percent of them are in the wealthier countries. In Vietnam, which is an important node in global clothing and shoe industry, only 12 percent of its population has been vaccinated. Furthermore, due to a shortage of shipping containers its price has soared four times compared to last year!
Bloomberg Economics compiled some data and it shows shortages stand at just off a 20 year high. There are more than 70 ships stranded at Los Angeles (222,000 TEUs) and around 53 anchored at Singapore (highest since April). The mention of these disruptions by CEOs have risen 412 percent as compared to last year. Time of Turnaround by RBC stands at 7.5 days vs. 3.5 days pre pandemic
PMI indicates delayed delivery times for manufacturers.
Overall, it is safe to assume that supply chain disruptions will get worse before they get better. Watch out for those presents at Christmas, you may not be able to find one – even for yourself!