Closed factories, bottled ports and the entire global supply chain is stalled. Shortages weigh on global growth, as the IMF recalled this week
A lack of raw materials
“Raw materials still come mainly from emerging countries (India, Brazil, etc.) where the management of the epidemic crisis has been complicated”, explains Isabelle Méjean, economist and professor at Sciences Po Paris. These countries have faced sudden surges in demand, first with the economic recovery after the 2020 recession due to the health crisis. The explosion of teleworking and e-commerce have also increased the demand for cardboard packaging tenfold and fueled tensions in the wood sector.
Construction is in a panic, as is the furniture with enduring shortages. The edition lacks paper to print its books.
Another factor amplifying the blockages: very few factories supply the bulk of processed raw materials. The shutdown this summer of a plant in the United States specializing in a rare plastic used in perfumery has thus disrupted the entire chain.
Some manufacturers could refer to other materials but this requires adjustments in factories, explains Yann De Feraudy, president of France Supply Chain and head of operations for the Rocher group (Petit Bateau brands, Yves Rocher). In the meantime, “we must now order three months in advance […]. Prices go up until there is no more »material available.
The pandemic has shown the limits of global “dependence” on Southeast Asian factories, according to Jonathan Owens, logistics expert at the British University of Salford, who calls for the repatriation of certain productions even “if the raw materials will continue. to come mainly from the Far East ”.
The lockdowns have indeed led to the closure of factories, blocking sectors such as textiles in Vietnam or electronics and automobiles, among others, in China.
For products like semiconductors, these shutdowns have had a snowballing effect on car assembly plants as far as Europe: the global automotive sector is expected to lose $ 210 billion in 2021, according to Alix Partners. And the delay will take months to be absorbed.
Congested ports, container problems
“It took two months for European secondary ports to recover from the blockage of the Suez Canal” by a mega container ship, stuck for six days in March across this crucial route for international maritime trade, recalls Jonathan Owens.
The Chinese port of Ningbo-Zhoushan, third in the world in terms of shipments, closed for two weeks in August due to an outbreak of Covid-19, overwhelming neighboring ports. “Result, containers which should be in Egypt at the moment are blocked in China”, according to the expert. Ditto at the end of May with the closure of the Chinese port of Yantian.
Added to this are the increasingly violent typhoons, additional customs checks in the UK with Brexit, health checks on crews and goods.
Another problem is the accumulation in importing ports of containers that cannot leave for lack of cargo. Result: there is a lack of it in the export ports… in China. “It would cost billions to transport air”, philosopher Mr. Owens, recalling that the prices of sea freight have increased tenfold in 18 months.
The US port of Los Angeles, where 40% of containers destined for the United States arrive, found itself overwhelmed, to the point of now having to operate 24 hours a day to reduce queues.
In Europe, several giant container ships full of unloadable Christmas goods at Felixstowe, the UK’s largest container port with congested terminals, have been diverted to Rotterdam or Amsterdam.
Saturated warehouses, absent drivers
“We are reaching the peak of the Christmas season, but products that should have arrived two months ago are being unloaded at the same time,” observes Jonathan Owens. And shortages of truck drivers complicate the situation. In the United Kingdom, the government has decided to grant temporary visas to European drivers but is struggling to find a taker.
In France, there is a shortage of around “15,000 truck drivers” and “there is also a shortage of operators and order pickers. […] with the Covid, some have chosen to change jobs, ”adds Yann De Feraudy.