Inflation, shortages continue in uneven recovery
After the first round of COVID lockdowns in China last spring, industries of all types scrambled to revamp supply chains and move them out of China to other parts of Asia or closer to home. The biggest concerns that led to those changes are being realized now as new COVID outbreaks are causing delays for all manner of products.
As demand picks up, an outbreak at the Chinese port of Shenzhen, one of the busiest in the world, has stunted global shipping. About 160,000 containers sit waiting to be loaded at Shenzhen’s Yantian port, which handled 50% more than the Port of Los Angeles in 2020.
“The delays have already resulted in pressurizing soaring shipping prices within China due to a lack of containers and increased export demand,” Josh Brazil, vice president of marketing at supply chain intelligence firm project44, told Yahoo! Finance. “These high shipping costs are just one factor that may contribute to an additional looming threat to global inflation.”
Outbreaks in Taiwan and Malaysia are shuttering factories that produce already-scarce microchips needed for car manufacturing among other IoT devices.
Inflation, which continued to climb in May, might be made worse if supply chain issues limit access to key manufacturing components. Consumer prices are already at their highest levels in a decade thanks to demand outstripping supply as Western economies reopen thanks to vaccines but large parts of the rest of the world lag behind.
Leaders at the G7 summit in England pledged to purchase 1 billion vaccine doses to distribute to the rest of the world. “We’re going to help lead the world out of this pandemic along with our global partners,” President Joe Biden said.