Supply chain problems could ease, but Omicron could pose risks


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December 10, 2021: Supply chain bottlenecks are expected to ease, but from tense levels in the first quarter of 2022 and gradually subside as the supply of goods improves, the consumer demand changes and labor markets evolve, Moody’s Investors Service said in a report.

Other findings include:

  • The discovery of the new Omicron variant could cause the growls to linger longer than Moody’s expects, posing risks to global growth and the inflation outlook.
  • Overall, global manufacturing and trade activity remains strong and labor markets continue to improve; and
  • Taiwan’s exports of electronic components – often taken as an indicator of semiconductor shipments – continued to increase in November.

“Our forecast for global growth and inflation assumes that demand for goods will moderate in 2022 as consumers shift to consuming services. But the spread of the new variant of the virus, depending on its transmissibility and its virulence, could further slow demand for services and lead to further disruption of supply, the report said.

Semiconductor production has been a closely watched indicator of tensions between supply and demand in the global economy, according to the report. “Taiwan’s exports of electronic components, often taken as an indicator of semiconductor shipments, continued to increase in November. Auto production in Germany and the United States, which has been crippled by semiconductor shortages, edged up in October, suggesting that semiconductor shortages in the industry may no longer deteriorate and could soften up. However, the prolonged shortage of chips – along with a shortage of magnesium – has driven the order book for German motor vehicles to a spiral, and improvement will take several months. “

Recent data indicates that freight rates for moving goods to the United States and Europe have generally stabilized with prices slightly lower in early December to the peak in October. Nonetheless, the growing complexity of the supply chain will continue to complicate the path of economic recovery. Pressure on shipments is likely to ease only slowly given the need to replenish inventories, strong real estate activity, investment and production activity as the economic expansion strengthens. 19 epidemics and extreme weather events could make disruptions last longer. “

Pristine navigation crunch space; freight rates increase
The space crisis is expected on TPEB (Asia-North America) through late 2021 and early 2022 as carriers continue to announce additional blank crossings, Flexport said in its latest update.

“Congestion-related delays, slippery schedules, early closure of feeder port operations and Covid-related restrictions are all at play to reduce available capacity. Blank crossings to the PSW in particular are severe. “

Tariff levels remain high due to strong demand ahead of the Lunar New Year, and the premium market also remains strong. “Continue to book well in advance (at least 4-6 weeks) before the targeted departure to have the best chance of reaching the target departure date. Encourage suppliers to be flexible and accommodate departures from different original ports. “

Drewry World Container Composite Index rose 2.3% to $ 9,262.02 / 40ft container this week and remains 170% higher than a year ago.

Freight rates on Shanghai-Los Angeles jumped 5% to $ 10,138 / 40-foot box. Spot rates on the Shanghai-New York and Shanghai-Genoa routes rose 4% and 3% to $ 13,118 and $ 12,801 / FEU, respectively.

“Rates on Shanghai-Rotterdam, Los Angeles-Shanghai and New York-Rotterdam have hovered around the level of the week before. Drewry expects rates to remain stable over the coming week.”

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