Chinese Lockdowns Trigger Panic Across Supply Chains: Prepare Your Self For Shortage Of Everything

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Widespread port shutdowns and factory closures in China are threatening to push already-stressed global supply chains over the edge. Chaos is fast spreading at Chinese ports as new lockdown mandates have started to be put in place after another wave of virus cases has been confirmed.
The measures are aggravating port congestion all across the country just as operations started to be resumed last month. Many sources on the shipping industry said the new port shutdowns are likely to bring a repeat of the shipping disruption experienced earlier this year, when the nation’s key ports, Ningbo and Yantian, suspended all export operations for weeks. That event has contributed to the aggravation of shortages worldwide. And as several nations continue to struggle with empty shelves, including the UK and the US, the scarcity of consumer products may hit its worst level on early 2022.
With approximately 350 ships waiting to dock at Chinese ports to either load or unload goods, almost 4 million containers remain stranded at sea. And as shipping prices climb, some Chinese manufacturers have stopped exporting goods to the U.S. Inflated costs for shipping and ocean freight are inflaming the export crisis in China and causing severe import delays all over the globe. Industry executives are warning U.S. retailers to brace for inventory shortfalls, significant price increases, longer production times, shortages of materials and delays in order delivery.
Higher shipping costs are also adding to overall inflationary pressures for the global economy in 2022. Unfortunately, this means that if consumer prices are already nearing absurd levels right now, next year, price hikes are going to be even more shocking. Meanwhile, in the U.S. cost, the cargo ship logjam has never been worse. Despite claims from officials that the number has dwindled in recent weeks, an analysis published by the firm MarineTracker exposed that the number of ships stuck outside the California coast is still at an all-time high.
The analysis also has shown that dozens of ships have been waiting to berth since October, leaving thousands of sailors stranded at sea as they wait to be allowed on dry land. The contradiction in the official number of ships comes as a result of a new policy recently introduced by shipping trade groups that encourage incoming vessels to wait out in the open ocean amid the worsening logjam – rather than at the congested ports.
MarineTracker data revealed that hundreds of ships are sitting more than 100 miles away from the California coast, nearing the coast of Mexico or Taiwan. The impact of our domestic port crisis, the ongoing container shortage, and the new Chinese restrictions are disproportionately hitting American farmers, who are having an extremely difficult time in getting their goods out of the country to foreign buyers.
In a recent statement, Rep. Dusty Johnson explained that the situation is leading to the “destruction of millions of dollars in value”. Johnson argued that Asian ocean carriers are “unfairly discriminating against American cargo.” He noted that “shipping companies offload foreign goods in U.S. ports and then simply head back to Asia, so they can bring more goods back to the U.S., rather than taking the time to fill up with American goods to sell abroad”. “Unfortunately because it’s an oligopoly, you’ve got to take it or leave it if you’re an American agricultural shipper,” he added. “The terms often say that liquidated damages for you canceling a container is $100. Well there can be $100,000 of goods in each container.”
The U.S. food industry has already been struggling with shortages of workers, drivers, and rampant inflation that has driven up the price of energy, feed and ferrilizer. Consumer food prices in the United States have just jumped to their highest levels in nearly 40 years. Last Friday, the Bureau of Labor Statistics reported that food prices have rose an additional 6 percent in November, the highest month-to-month spike since 1982, with beef prices leading the rise, facing a dramatic 20.9 percent increase.
Needless to say, this is very bad news for American consumers who are seeing their purchasing power sharply collapse as inflation runs wild. We’re effectively headed to a very painful winter that will bring food insecurity back to millions of American families. Sadly, we haven’t seen the worst of shortages and price increases just yet. Now more than ever, we should get ready for the challenges that are coming for us. A perfect storm is on the horizon, and all of our problems are about to get out of control.

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Epic Economist

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