Omicron supply chain woes

China and the rest of Asia are yet to see a major wave of Omicron which, according to Frederic Neumann, co-head of Asian economic research at HSBC Holdings, could trigger ‘the mother of all supply chain stumbles’.

Effects of lockdowns to combat the spread of Omicron are so far limited in China with four of the largest port cities – Shanghai, Dalian, Tianjin and Shenzhen – imposing targeted restrictions which, as yet, have not involved closing the docks.

Last year shutdowns in Ningbo and Shenzhen, the world’s third and fourth largest container ports by volume, led to congestion and delays, causing some ships to reroute to other ports.

Despite minor disruption so far, Volkswagen and Toyota have both announced that they will temporarily suspend operations in Tianjin because of lockdowns and supply chains remain perilously fragile.

Delivery times of products shipped from China, home to around one third of global manufacturing, to the US are as high as ever and American trucking companies and warehouses are losing ever more workers to sickness and quarantines.

The Biden administration has undertaken moves to try to tackle congestion at ports and many are now working through their backlog of containers, prompted in part by the threat of additional fees for languishing containers.