Delta variant affects production in Asia, congests ports, and raises costs

The supply chain bottleneck that was supposed to be temporary now looks set to last until next year due to the advance of the Covid-19 Delta variant that is disrupting production at factories in Asia, disrupting shipping, and causing further shocks to the global economy.

Factories that already faced shortages of inputs and energy and more expensive raw materials are now forced to pay more to get space on ships. Freights are at record highs and some exporters are raising prices or simply canceling shipments.

“We didn’t get enough components, we didn’t get containers, and the costs have gone up tremendously,” lamented Christopher Tse, CEO of Musical Electronics, a Hong Kong-based company that makes a variety of consumer products like Bluetooth speakers and the Magic Cube.

China’s efforts to eliminate Covid-19 mean that a small number of cases can cause major disruptions to international trade. This month, the government temporarily closed the Port of Ningbo – the third busiest in the world – for two weeks, after a single worker at the site tested positive for the delta variant. This year, Shenzhen ports were also closed after the discovery of some Covid-19 cases.

To get an idea of ​​the consequences for Brazil, see the graph below for the imbalance in the movement of containers in the country since 2010:

Unbalance in Container Handling in Brazil | Jan 2010 to June 2021

Source: DataLiner (To request a DataLiner demo click here)

Source: Valor Econômico

To read the full original article, visit the link:

https://valor.globo.com/mundo/noticia/2021/08/27/variante-delta-afeta-producao-na-asia-congestiona-portos-e-eleva-os-custos.ghtml

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