Index Option Calls
  • Home
  • Latest News
  • Email Whitelisting
  • Privacy Policy
  • Home
  • Latest News
  • Email Whitelisting
  • Privacy Policy
No Result
View All Result
Index Option Calls
No Result
View All Result
Home Latest News

‘The crisis is not yet over’: Omicron variant could deal another blow to supply chains

by
December 2, 2021
in Latest News
0
0
SHARES
0
VIEWS
Share on FacebookShare on Twitter

RELATED POSTS

Investors see little to be gained in stocks the rest of the year, favor dividends, CNBC survey shows

FDA backs changing Covid booster shots to target most recent omicron subvariants

Cargo ships load and unload containers at Qingdao Port’s foreign trade container terminal in Qingdao, East China’s Shandong Province, Nov 11, 2021.

Yu Fangping | Costfoto | Barcroft Media | Getty Images

Ports and companies have been battling the global supply chain crisis since the start of the year. Just as it appeared like the crisis was beginning to stabilize, the industry may now face yet another blow: the new omicron Covid variant.

Omicron is “another test of resilience” for already-stressed supply chains, said Per Hong, senior partner at consulting firm Kearney.

“Supply chains remain vulnerable to pandemic-related disruptions, with the Omicron variant highlighting that the crisis is not yet over,” said Sian Fenner, lead Asia economist at Oxford Economics, in a note on Wednesday.

A lot of unknowns, but Omicron (is) certainly setting up to be yet another test of resilience for global supply chains that were already under stress and in the midst of a lengthy healing process.

Per Hong

senior partner, Kearney

The world first became aware of the new omicron variant late last week, after a South African scientist flagged the emergence of the strain. The World Health Organization swiftly labeled it a “variant of concern,” adding that it’s likely to spread further and could potentially become a “very high” global risk.

Since then, the strain has been found among cases in the U.K., France, Israel, Belgium, the Netherlands, Germany, Italy, Australia, Canada and Hong Kong.

‘Knock-on effects’ of lockdowns

While there have been no reported cases of omicron in mainland China, Hong said he’s closely watching the Chinese government’s response due to cases surfacing in Hong Kong.

“China is expected to double down on its ‘zero-COVID’ policy that in the past has included mass lockdowns of entire cities, enforced quarantines, as well strict checks at ports, including monitoring ships and cargo, to prevent cases from coming in,” he wrote.

Other analysts have also warned that China could intensify its zero-Covid measures with the emergence of omicron.

As disruptions caused by the Covid pandemic early on have shown, lockdown measures in one country have “significant knock-on effects both up and downstream into other areas,” Hong pointed out.

“If this does happen, not only will shipping be constrained, but we are certain to see yet more shortages of key manufacturing components and extended order backlogs for core electronic, automotive and consumer products depending on regions impacted,” he said.

Some of the world’s busiest ports are in China. Of the top 10 busiest ports, seven are in China, according to data from the World Shipping Council. Shanghai ranks first, Ningbo-Zhoushan ranks third, and Shenzhen in fourth place, while Hong Kong is the eighth most busy port last year.

To be sure, the WHO has said it remains unclear whether the omicron variant causes more severe disease than other strains, such as delta.

“A lot of unknowns, but Omicron [is] certainly setting up to be yet another test of resilience for global supply chains that were already under stress and in the midst of a lengthy healing process,” said Hong.

Omicron could set back regional exports recovery

Supply chains everywhere have been hit by massive disruptions this year, from container shortages to floods and Covid infections setting off port closures. The energy crises in mainland China and Europe were the latest to roil the shipping industry.

But the situation had looked to be stabilizing recently – though still far way off from pre-Covid times, according to analysts.

Most governments in the region are likely to resist re-imposing severe restrictions, but the bottom line is that supply chains will remain under pressure while the Covid threat persists.

TS Lombard

As restrictions eased in Asia, workers were able to return and factories came online again in September – although there were still some bumps along the way like reinstating of some restrictions to stabilize recent Covid waves, according to Fenner of Oxford Economics.

“Even as more production comes online, there remain logistical challenges, particularly across shipping but also in air freight,” she said. That includes constraints on shipping supply in the short run, due to the “multi-year lag” between new orders for ships and deliveries.

Globally, less than half the ships arrived on time during 2021, and delays for late ships consistently add more than a week to delivery times — compared to about four days in 2018 and 2019, according to Oxford Economics.

Vietnam, a key exporter in Asia, is set to regain exports share after an “especially severe” third Covid wave, said research firm TS Lombard. The pandemic had caused the Southeast Asian country to shut down its factories, causing problems for many American firms with manufacturing facilities there, in particular.

But, if omicron throws a wrench in the works on supply chain recovery, it could pose a threat to regional exports recovery, said analysts from TS Lombard in a note on Monday.

“Most governments in the region are likely to resist re-imposing severe restrictions, but the bottom line is that supply chains will remain under pressure while the Covid threat persists,” they said.

If omicron hits supply chains, the impact on Asia’s gross domestic product is likely to be a fall of 1.6 percentage points for next year, said Oxford Economics.

ShareTweetPin

Related Posts

Investors see little to be gained in stocks the rest of the year, favor dividends, CNBC survey shows

by
June 30, 2022
0

Traders on the floor of the NYSE, June 29, 2022. Source: NYSE (Click here to subscribe to the new Delivering...

FDA backs changing Covid booster shots to target most recent omicron subvariants

by
June 30, 2022
0

There hasn't been enough research on how much protection a fourth dose can offer, medical professionals told CNBC. Justin Sullivan...

Ketanji Brown Jackson to be sworn in as Supreme Court justice, replacing Stephen Breyer

by
June 30, 2022
0

[The above live stream is scheduled to start at noon. Please refresh the page if the video isn't playing after...

The worst first half for stocks since 1970? It’s not as bad as it looks.

by
June 30, 2022
0

The headlines are everywhere: with one day left in the first half of the year, the S & P 500...

GOP megadonors turn on Trump after Jan. 6 hearings, look to DeSantis, Pence, other 2024 hopefuls

by
June 30, 2022
0

A video of former U.S. President Donald Trump from his January 6th Rose Garden statement is played as Cassidy Hutchinson,...

Next Post

Asia-Pacific stocks mixed as uncertainty surrounding omicron variant lingers

Razer shares fall over 8% after group including co-founder offers to take company private

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

email

Get the daily email about stock.

Please Enter Your Email Address:

By opting in you agree to our Privacy Policy. You also agree to receive emails from us and our affiliates. Remember that you can opt-out any time, we hate spam too!

MOST VIEWED

  • A Couple Stored IRA Gold at Home. They Owe the IRS More Than $300,000.

    0 shares
    Share 0 Tweet 0
  • A California Couple Spent Eight Years Building Their Dream Retirement Home in Costa Rica

    0 shares
    Share 0 Tweet 0
  • Goldman Sachs says buy these stocks to play Web 3.0 and the metaverse

    0 shares
    Share 0 Tweet 0
  • Goldman Sachs picks new stocks to buy — and says these 5 have over 100% upside

    0 shares
    Share 0 Tweet 0
  • In his final warning, this stock trading wizard — who made big money in bear markets and crashes — called this market a bubble like no other

    0 shares
    Share 0 Tweet 0
  • Home
  • Latest News
  • Email Whitelisting
  • Privacy Policy
All rights reserved by www.indexoptioncalls.com
No Result
View All Result
  • Home
  • Latest News
  • Email Whitelisting
  • Privacy Policy

All rights reserved by www.indexoptioncalls.com