Language
Country/Area
No result found
From chip shortages to food crises: What are the big supply chain challenges in 2022?
In 2021, with the COVID-19 pandemic and the subsequent Russia-Ukraine conflict, the global supply chain encountered serious challenges. This has led to a slowdown in global supplies, resulting in shortages of goods and affecting consumption patterns. The economic slowdown has been caused by workers falling sick due to COVID-19 and by policies and restrictions that have severely limited the supply of human resources. On the freight side, goods are stuck at ports due to manpower shortages. The global chip shortage has further exacerbated the supply chain crisis, especially in the automotive and electronics sectors.
Increased consumer spending during the Christmas and holiday seasons of 2021, coupled with the spread of Omicron mutant viruses, has worsened the already tight supply.
Since the COVID-19 pandemic began in early 2020, global supply chains initially encountered unprecedented challenges, with factories shut down and production affected by fears of infection. Despite optimistic business forecasts for 2021, global trade is still operating at a reduced capacity, and widespread vaccination of the new crown vaccine is advancing rapidly in wealthy regions, while developing countries face more challenges due to the slow progress of vaccination.
Vietnam is an important supplier of apparel to the United States. Due to the COVID-19 epidemic, many factories were forced to close, resulting in limited production capacity.
Economists point out that the lean production model (also known as "just-in-time production") has become a root cause of supply chain disruptions. This model relies on the precise matching of raw materials and finished products in an attempt to reduce warehousing costs and save expenses. However, it is extremely vulnerable to sudden changes in demand. Once COVID-19 shuts down manufacturing, a series of supply chain disruptions followed. Amid surge in demand, factories unable to keep up with production are experiencing serious backlogs, further affecting global shipping.
The Port of Los Angeles in the United States has become a major hub for Asian imports. However, in the face of such huge demand, it cannot clear ships in time, and the supply chain crisis has worsened.
Shipping Challenges
By mid-2021, major U.S. ports are facing unprecedented volumes of imported cargo. Due to a shortage of staff, the factory area was overcrowded and the time required to reprocess these goods was unexpectedly extended. Many container ships have been waiting outside ports for days or even weeks, and inland rail and trucking industries are also experiencing difficulties due to increased freight volumes. At the beginning of the epidemic, the U.S. truck industry faced a driver shortage, which increased the burden on the entire supply chain.
Although there are enough containers around the world to meet demand, there is a shortage of containers because cargo is stranded or misplaced in the supply chain.
As major U.S. retailers prepare for the holiday season, they are chartering container ships to handle the surge in demand. The U.S. Transportation Secretary said he expects the supply chain crisis to "undoubtedly" extend into 2022. In November 2021, there were reports that Chinese ministers called on citizens to stock up on food for the winter.
According to a report by Adobe Digital Insights, online consumers faced more than 2 billion out-of-stock messages in October 2021, which is double the number during the same period in 2020.
Impact and Consequences
Among these challenges, there are significant shortages of certain products in the United States, including electronics, jewelry, clothing, and home furnishings. While the global economy is slowly recovering from the impact of the epidemic, China's exports have risen sharply and production has rapidly increased. China's trade surplus with the United States will increase to US$335.5 billion in 2021, indicating that China's position in the global market has become more prominent.
The supply chain crisis is the main reason for the shortage of infant formula and hygiene products in the United States in 2022.
The report pointed out that in December 2022, global demand for commercial aircraft far exceeded supply, leading to queues in the aviation manufacturing industry. Boeing and Airbus have sold out their popular models until 2029.
Future Outlook and Thoughts
Even in 2022, CEOs of major automakers and electronics manufacturers predict that the shortage of semiconductor chips will continue into the first half of the year. There is no hope of returning to the supply chain model before the COVID-19 pandemic, and many countries are experiencing product shortages at different levels, which is even more detrimental to the global trade pattern.
The conflict between Russia and Ukraine has a profound impact on the global economy and trade. The two countries together share more than 25% of the global wheat trade, which has inadvertently contributed to a new supply crisis.
Many challenging regions are particularly vulnerable, where democracy or human rights issues also impact their supply chains. In the future, facing these challenges, how will the supply chain be reorganized to respond to changing global demand and the changing economic environment?
