Armada Corporate Intelligence recently wrote an interesting alert about continued supply chain disruptions due to the pandemic, shortage of truck drivers and shortage of crews for cargo ships.  See article below:

Getting goods transported around the world may become more difficult because of the pandemic, and here’s why. The result is that the disruptions experienced in 2021 are likely to continue in 2022. There are two factors currently driving worker shortages around the world, regardless of mode of transportation.

The first factor is the virus itself and current experiences with outbreaks. Remember that we have warned our readers throughout 2021 that China’s zero-case policy relative to COVID will continue to be a wildcard in the global supply chain, especially from a continuity perspective. For instance, just last week, Chinese authorities shut down a city of 13 million people (they went into snap lockdowns in Xi’an) because of 127 confirmed cases (if the reporting of the data is accurate).

Shutdowns are likely to continue under the weight of Omicron.

Remember that even with vaccines, Omicron still poses a significant risk to a society like China. Even though published vaccine rates seem to be very high, there are tens of millions of Chinese that have had no vaccine and no real prior exposure to the virus. And we still don’t know the efficacy of the Chinese vaccine. Citizens in the country would seemingly have very little personal exposure to the virus and little natural immunity built up. US Domestic Economic Items Global Economic Items China shut down a city of 13 million over reportedly just 127 cases of Omicron.

Omicron running rampant through the society could overwhelm hospital systems even more than we see throughout Europe and the US, even though the virus is perhaps milder than we saw with Delta. There is tremendous risk there for the Chinese Government and they will take steps to ensure that the virus doesn’t spread out of control.

The second issue is one of fear and frustration. Global transportation companies are reporting that many workers are not coming back after COVID scares. The process in Europe and Asia of going through quarantines is enough to push a lot of transportation workers to retire early out of their industries, opting for other types of blue-collar work where they can get it. Other factors like congestion, higher operating costs, unreasonable hours, and too much time away from home are impacting truck drivers heavily. There are fewer new entrants into the marketplace over the past two years because of these fears, and older worker retirements are accelerating.

China estimated that they are now short more than 100,000 truck drivers.

Maritime operators are also seeing crew resignations. Crews got stranded after months at sea and were not able to get out of foreign markets and back home during the height of COVID. Varying quarantine and travel restrictions across different countries created crew dislocations, and that pushed many out of the industry. Companies are reporting that many crew members simply didn’t return to their ships when they were called to do so. The sector is still trying to figure out just how many seafarers were impacted and opted to “retire from the industry”, but they know that many of those are senior crew members with extensive experience. They are difficult to replace.

Impact: analysts are “all over the place” on when the global supply chain will improve. Just remember that global sourcing and transportation managers are getting notes from their shipping carriers that capacity is still tight, unexpected delays are holding up and extending transit times, and costs continue to rise.

We are going into a period that should have been a normalizing period – and instead we are being subjected to more volatility and uncertainty. I hope we can give you better news in a few months but expect volatility to continue and the impact to be widespread around the world.

Courtesy Armada Corporate Intelligence – Author Keith Prather