Globalization Continues To Disappoint As Supply Chain Issues To Last Much Longer Than Expected
The negative side of globalization has been made blatantly obvious to anyone who has visited a supermarket in the last year and a half. While beneficial in the short-term in sparingly few aspects, the entire global supply chain operates with almost no room for error, meaning that any hiccup at any stage of the production and distribution process anywhere in the world sends ripple effects right across the planet. And from the looks of it, it would appear that these disruptions and subsequent consumer woes are here to stay far beyond any health effects of the pandemic.
According to The Epoch Times, large players in the global logistics industry see supply chain bottlenecks continuing to plague the global economy for at least another two years. Sultan Ahmed Bin Sulayem, CEO of DP World that operates the port in Dubai among others, explained to Bloomberg News that he sees shipping bottlenecks to persist through 2023, which would in turn further calcify the trend of increasing shipping costs around the world. This will, in turn, affect any economy that is significantly plugged into the global system, which so happens to be everyone except North Korea.
“The global supply chain was in crisis in the beginning of the pandemic,” Sulayem told the news outlet, adding that “freight rates will continue to increase.” And “maybe in 2023, we’ll see an easing,” he continued.
One of the key sources of the persistent bottlenecks appears to be China’s still-draconian covid policies, which sees entire ports and cities being put on lockdown at a moment’s notice. Given China’s near-monopoly on the production of certain product inputs, this routinely sets back operations in other parts of the world for months if not years.
“Even now, every time they see an incident of COVID in China, they shut down a port,” he said. “Many manufacturers around the world are delayed by as much as three years because they can’t get components from China. They’re taking a very, very aggressive approach.”
In the long run, businesses and national governments around the world are looking into ways of diversifying their supply chains away from China to other countries that have less sporadic responses to covid outbreaks. Sulayem echoed this sentiment by saying that there is “huge potential in India and that reflects in DP World’s investments. Africa continues to grow, and there’s also Southeast Asia, mainly Indonesia.”
Shipping giant Maersk buttressed Sulayem’s concerns with regard to the global supply chain system.
“Regardless if it is a port, vessel, or warehouse, when one becomes impacted it quickly results in a downward spiral as delays accumulate,” said Maersk’s update. “We see pockets of improvements, only to get setbacks when our operations encounters new COVID-19 outbreaks and lockdowns.”