Going into 2021, supply networks were already dealing with rising demand, increasing port congestion, and production delays. This year’s increased COVID-19 instances, extreme weather events, and Suez Canal closure increased the difficulties.
Companies were forced to seek other suppliers when India’s key manufacturing center closed plants in response to an increase in COVID-19 cases. Hurricane Ida and a February severe frost in Texas wreaked havoc on the petrochemical supply chain, causing delays in manufacturing resins, plastics, and other components needed in everyday items. Furthermore, port restrictions and the Ever Given being stranded in the Suez Canal for nearly a week slowed cargo movements and worsened congestion.
Here’s a look back at the top 5 logistics stories from this year (2021):
Suez Canal blockage that affected global supply chains
When the Ever Given became stranded in the Suez Canal, it drew international attention as engineers attempted to free the ship and re-establish global commerce routes.
Ever Given traveled through the Suez Canal on March 23, 2021, when it got trapped in a sandstorm. Strong gusts at nearly 50 mph caused a “loss of capacity to direct the ship,” forcing the hull to deviate. The ship then went aground, twisted sideways, and unable to free itself lay obstructing the canal on both sides.
How much has the obstruction cost?
Around 12% of world trade transits through the canal every day. According to Allianz, a German insurer, the obstruction could cost global commerce $6 billion to $10 billion every week and lower yearly trade growth by 0.2 to 0.4 percentage points.
Hundreds of cargo vessels were still queuing to pass through the canal days after Ever Given was freed due to the backlog caused by the blockade.
Global chip shortages
The global chip shortage is an ongoing crisis that has witnessed demand outstripping semiconductor chip supply, affecting over 169 industries and resulting in significant price increases, shortages, and queues among consumers for cars, graphics cards, video game consoles, computers, and other products that require semiconductors.
The global chip scarcity is primarily due to lockdowns during the COVID-19 epidemic. Because of these global lockdowns, chip manufacturing plants were shut down, causing stockpiles to deplete. With more individuals learning and working from home during the epidemic, there has been an increase in demand for computers, monitors, network peripherals, and home entertainment internet services.
In addition to the already limited supplies, in October 2020, an Asahi Kasei semiconductor facility specializing in ADC and DAC components caught fire. Another Japanese facility operated by Renesas Electronics, which provides 30% of the worldwide market for microcontroller units used in automobiles, caught fire in March 2021.
According to a new analysis, Deloitte expects the semiconductor shortfall to endure until early 2023. The consultancy group believes customers would still have to wait 10 to 20 weeks for various types of chips till the end of 2022.
Shanghai airport terminal closure leads to logistics delays.
China enacted rigorous steps to control the spread of COVID-19 in August of this year, putting constraints on its already limited aviation freight capacity out of the country.
Staff in Shanghai Pudong, for example, were required to work for seven days, quarantined at a hotel for seven days, and then quarantined at home for seven days more. Long handling times (2-3 times longer than typical) have been observed due to airport staff quitting, and several cargo-aircrafts have taken off with very little or no cargo. Shanghai Pudong International handles around 3.1 million tonnes of cargo each year and is one of China’s primary loading sites.
Hurricane Ida disrupts freight movement – Category 4 hurricane.
Ida slammed into Louisiana with 150 mph gusts towards the end of August, causing storm surges and floods. New Orleans lost electricity due to the hurricane, forcing the city to rely on generators.
The infrastructural damage and commercial consequences might be long-term. It will take considerably longer to rebuild damaged docks, fuel pumps, transformers, subterranean infrastructure, computer systems, vehicles, cranes, and other infrastructure.
Several oil refineries and petrochemical factories were located where Ida struck, a sector that experienced weather-related problems earlier this year owing to winter storms in Texas. Dow, ExxonMobil, and Shell closed down sections of their factories and refineries ahead of the storm.
Coronavirus outbreak in India
As of March 2021, India was the ninth-largest trading partner with the United States, accounting for 2.4% of year-to-date trade. Organic chemicals, industrial machinery, cotton garments, and medicinal preparations are among the most common imports from the nation.
During the COVID-19 second wave, one serious problem in India was the lack of oxygen. Oxygen was being used to treat coronavirus sufferers and also in the production of automobiles. Some automakers paused manufacturing to reserve oxygen for patients.
The circumstances also affected pharmaceutical manufacturing. Approximately 80% of active pharmaceutical ingredients were manufactured in India and China. This impacted global pharma supply chains. India faced a major outbreak from April to June 2021 when the maximum number of active cases crossed 400,000.
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