Global Supply Chain in Crisis Again… More Reasons to Buy Domestic
As COVID lockdowns in China persist, the world is in for yet another summer of supply chain chaos. We expect further disruptions to the global supply chain and longer port wait times with additional container congestion. Between supply chain shortages and Russia’s war in Ukraine affecting fuel prices, the world economy is facing the perfect storm. Fears of a worldwide recession are real. Now, as the port of Shanghai is running at half-speed due to long weeks under strict lockdown, concerns grow around the globe that this might bring new shortages. The war in Ukraine and the global pandemic have accelerated the return to old protectionist policies. So, what does this mean? North America also needs to protect itself by producing and buying domestic where possible.
Shanghai has been locked down for roughly a month, slowing manufacturing, slowing truck deliveries, and causing container logjams at ports. With infections now rising in Beijing, many expect similar restrictions to be imposed in the Chinese capital. Even if China — which accounts for 12% of global trade — eases its measures, the resulting surge in shipments could overwhelm already strained ports in the U.S. and Europe. Sailing time to US and EU has increased up to 120 days!
- Shortages of Chinese-made goods will further fuel rocketing inflation in the U.S. and elsewhere, reports Fortune.
- About 20% of container ships are now stuck at ports worldwide; just under a third of the backlog comes from China.
- “We expect a bigger mess than last year,” the CEO of the Port of Antwerp, Europe’s second-busiest for container volume, tells Bloomberg.
Last year it became more obvious that in addition to extra transportation costs there are other costs and drawbacks to importing goods from China such as importing problems, long lead times and cancellations, poor quality control, delays, sharp cost increases, and more. “Many other companies tried to offshore a lot of their packaging to try to reduce costs, rather than opt for a more sustainable solution that would be produced domestically,” says Dave Heller, VP of Printex Transparent Packaging in Long Island, NY. “Sourcing domestically is much faster and less expensive than shipping from international suppliers. We need to return to buying made in America, manufacturing, and shipping domestically, here in North America. Buying domestically is better for the local economy.”
The restructuring in consumer demand during the pandemic has led to significant shortages of manufacturing components, order backlogs, delivery delays, and a spike in transportation costs and consumer prices. The world is again in crisis due to supply chain shortages around the world and specifically from shipping backlogs in China, and Russia’s war in Ukraine affecting fuel prices. If we want to protect the economy, we need to return to domestic manufacturing and shipping here in North America.