This week brought yet another wave of supply chain disruption. China is facing its worst COVID-19 outbreak since the beginning of 2020, and numerous cities are once again in lockdown under the country’s zero-COVID policy. Of course, this compounds the supply chain problems caused by Russia’s invasion of Ukraine, including bans on air freight routes and perilous conditions in the shipping industry. More than 100 crafts are still stranded in Ukrainian ports, and many international ports are refusing entry to Russian ships. Meanwhile, the union workers of Canadian Pacific Railway have voted to strike, threatening to cut off another important trade route and further raising the prices of crude oil and key agricultural inputs.
In Shenzhen, home to several tech manufacturers, business is shut down until at least March 20; many Hong Kong companies are closed until late April. Manufacturers already are reporting shipment delays on tech components, and automakers are bracing for ripple effects. The automotive industry is also affected by recent lockdowns in Changchun, home to Toyota and Volkswagen plants.
In response to sanctions on Russia (which we tracked last week), the country has now issued sanctions on exports of wood and forestry equipment, as well as telecom, medical, automotive, agricultural, electric and tech products. Russia also temporarily banned white and raw sugar exports, as well as wheat, rye, barley and maize, to neighboring Eurasian Economic Union countries. However, many of them had already announced import bans on Russian goods, so Russia’s sanctions are somewhat hollow.
Understandably, Ukraine has banned the export of wheat, oats, millet, buckwheat, sugar, cattle, meat and fertilizers to conserve these staples in order to feed its people. As a result, costs have climbed sharply around the world, and there are concerns about food shortages in poorer countries that rely on Ukraine’s exports. The Canadian Pacific strike also jeopardizes access to fertilizer right at the start of growing season, as about 15% of its business involves fertilizer transport.
As I told Forbes this week, our whole system is under tremendous stress. After a relentless cascade of disruption, supply chains are overstretched; overburdened; and short on capacity, funds and energy. And because the problems have often been unpredictable, it’s difficult for industry professionals to gather reliable data and prepare for the next challenge.
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