The impact of the Covid-19 epidemic has been catastrophic for global supply chains, with consequences continuing since the beginning of 2020, with ongoing consequences now growing rapidly. In this post, Sharmila Kantha discusses the causes of the disruption of the commodity, the global impact of the crisis, and the ways in which India – and the world – and the private sector can look at the situation to build long-term capacity to address similar issues.
The global commodity crisis has intensified in recent months, as a result of the ‘complete storm’ of many consolidated developments to question the very global trade model that has followed the world since the 1970s. Global companies, including automotive manufacturers, shoe manufacturers, and mobile phone manufacturers, have been required to reduce production and the impact is felt across sectors and areas. With the advent of the Omicron modification, some distractions may be present.
The range of causes for disruption of the global supply chain is huge, and these have led to the provision of space in products such as home appliances, computer chips, cars, etc., and include increasing installation costs, delivery times, and transportation costs, and even disrupting festival systems usually involving high consumer purchases.
Impact of the Covid-19 epidemic
The impact of the epidemic has been devastating on the supply chain, with consequences continuing since the beginning of 2020, and the ongoing consequences are now growing stronger. Various forms of economic recovery, closure, and inflation, in different places at a time, in different parts of the world have prevented the movement of goods across borders.
The progress of diversified vaccines between countries and the fear of reversing the spread of the virus among a small number of people who have been vaccinated slowly have created ‘lines of error’ in growth paths. Although 58% of people in developed economies are fully vaccinated and vaccines are adequate, low-income countries have rates below 5% (IMF (International Monetary Fund), 2021). The acquisition of developed economic vaccines has encouraged a resurgence of global economic stability, which in turn has exacerbated the shortage of resources. For example, the US saw the sale of homes and cars rise to its highest levels in 14 and 15 years, respectively.
Transportation problems
The global transport industry is facing unprecedented challenges. By October 2021, about 600 container vessels were waiting for lodging outside the ports, and the time to change ports on important ports had doubled. Shipping costs have increased. For example, the Shanghai Containerized Freight Index rose from less than US $ 1000 per TEU (twenty-foot unit) by June 2020 to $ 7,395 by the end of July 2021, According to Moody’s, 77% of the world’s largest ports facial defects.
What is the global impact?
The most serious impact of the supply chain disruption on the global economy is inflation, prompting policymakers to revisit renewal packages. The International Monetary Fund (IMF) has cited the failure of the supply chain as one of the leading causes of global inflation.
Although some small economies have begun to change interest rates, major economies have so far maintained lower interest rates. The US Federal Reserve has signed that it may begin to shrink and shrink its recovery package, which could increase uncertainty in global financial markets and thus contribute to growth.
Supply chain disruptions have also led to declining investments as businesses work to overcome current uncertainties. Real global investment declined sharply in the second quarter of 2021 and this will inevitably affect future growth (IMF, 2021).The impact on world trade is expected to be stabilized, according to the WTO (World Trade Organization), which predicts 10.8% trade growth by 2021 as the post-epidemic demand remains strong.
Recent developments in geopolitical1 have suggested that it is possible to eliminate globalization and the gradual economic downturn over time. Several governments have tried to address procurement disruption due to concerns about dependence on major source countries, and the term ‘resilience of supply chain’ is now an integral part of the dictionary in world affairs.Given the sheer number of factors responsible for creating this ‘perfect storm’, disassembling the fibers, and restoring the existing supply chain function will be a daunting task.
