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The shocking impact of Vietnam's blockade on global manufacturing: Did you know?
In 2021, the consequences of the COVID-19 pandemic and the subsequent Russian-Ukrainian invasion in 2022 have hit global supply chains as hard as ever. Factory shutdowns, employee sick leave and shipping delays have created global shortages and changed consumer buying behavior.
Since the early days of the pandemic, many companies have faced challenges from raw material shortages, especially chip shortages in the automotive and electronics industries.
With the arrival of the 2021 holiday season, consumer spending in North America has increased significantly. Combined with the spread of the Omicron variant virus, the already tense supply chain situation has become even more severe. The long-term impact of the supply chain crisis has also had a profound impact on food safety issues.
Root causes of the supply chain crisis
The COVID-19 outbreak in early 2020 forced global supply chains to pause as manufacturers waited until safety measures were fully implemented before resuming operations. While businesses are optimistic about the outlook for 2021, global trade is still operating at a reduced capacity and has failed to fully recover.
Many economists point to the widespread adoption of lean production concepts as a major cause of the supply chain disruption.
For example, Vietnam is a major supplier of clothing to the United States. Vietnam implemented a strict lockdown in 2020 during the pandemic, but many manufacturers were forced to close again after the outbreak in 2021, partly due to relatively low vaccination rates among employees. The Vietnamese government requires workers in high-risk areas to live in factories to maintain production operations.
Shipping crisis intensifies
In mid-2021, as import cargo volumes surged, major U.S. ports faced historic cargo delays. The terminal staff at the port were unable to process the cargo in a timely manner, resulting in a large number of cargo ships being stranded outside the port for days or weeks.
When it comes to cargo transportation, logistics companies are forced to seek new technological solutions to achieve efficient transportation.
As freight demand continues to rise, inland rail and truck transportation are unable to cope with the additional load, and labor shortages have further deepened the crisis. The U.S. trucking industry was already facing a driver shortage even before the pandemic.
Impact of the supply chain crisis
Major U.S. retailers are beginning to charter container ships ahead of the 2021 holiday season in preparation for high demand during the holidays. According to a November 2021 report by Adobe Digital Insights, online shoppers encountered more than 2 billion out-of-stock messages in the same month, which doubled from the same month in 2020.
In the United States, shortages of electronics, jewelry, clothing, pet supplies, and home and garden products are becoming increasingly severe.
As the world economy has struggled in the past few years, China's exports have grown rapidly. According to reports, China's trade surplus with the United States reached US$335.5 billion in 2021.
Future prospects
Looking ahead, CEOs of major automakers and electronics companies said the shortage of semiconductor chips will continue into the first half of 2022. Countries continue to suffer losses from supply chain issues, with particular impacts on regions where democracy is challenged or human rights issues are severe.
Given these challenges, a return to pre-pandemic supply chain status does not seem realistic in 2022.
In addition, the Russia-Ukraine conflict has also had a huge impact on the global product supply, which will further change the global economic and trade landscape. Another major challenge facing the global supply chain is the rising inflation rate, which seems to be constantly changing the pulse of international trade. As all parties work to resolve these issues, we might as well think about: In what direction will the future supply chain develop?
