Pandemic issues kink global supply chain for holidays
Holiday shopping will be far more expensive and frustrating this year, and we have COVID-19, the disappointing pace of vaccinations and power cuts in China to blame.
The mounting obstacles between Asian factories and American homes are dramatically slowing production and shipping. They also offer opportunities.
Anyone paying attention to business news will know the global supply chain is tangled. COVID-19 has shuttered Asian factories where vaccination rates are low. Chinese efforts to reduce emissions have also reduced power to manufacturers.
The container ship Ever Given’s blockage of the Suez Canal in March thew off shipping schedules and U.S. retailers mistakenly assumed a lengthy pandemic recession. Far fewer children will receive this year’s must-have gift, and products ranging from apparel to furniture will cost a lot more if you can find them.
While the United States has hoarded vaccines for Americans who don’t want them, only 20 percent of Vietnamese have protection against COVID. A rash of delta variant outbreaks has forced the government to shut down the economy again.
Closed factories in Ho Chi Minh City are bad news for retailers in Texas that need holiday goods placed on ships right now to arrive on time. Camilo Lyon, a retail analyst with financial data firm BTIG, told CNBC that clothing and footwear manufacturers are the hardest hit.
Even if goods reach the port, there may not be a ship waiting. The most infamous reason for the global shipping mess is the Ever Given, which blocked the Suez Canal for six days, but the shipping industry was under stress even before that.
No corporate executive saw COVID-19 coming, and none were alive the last time a pandemic disrupted the global economy. So, when governments ordered people to stay home, companies implemented the standard recession playbook by canceling orders, reducing inventory, laying off workers and paying down debt.
Shippers were no different. Many canceled orders for new ships and mothballed older, expensive-to-operate vessels. They battened down the hatches for a long storm.
Few corporate executives could have predicted what happened next. Governments flooded the economy with money, the recession lasted only two months and consumers went on an online shopping spree.
Only they bought different products, such as baking pans, pickling jars and home office furniture instead of business wear and new cars. They feathered