Global supply chain of raw materials and inputs suffers widespread blockages

The global supply chain for inputs and raw materials is stagnant, forcing factories to close and causing operational problems at ports.

Shortages punish global growth, as the IMF recalled this week. But where are the missing products and why?

Raw material shortage

“Raw materials still come mainly from emerging countries where managing the pandemic has been difficult,” explains economist Isabelle Méjean.

These countries have faced sudden increases in demand, first with the economic recovery after the recession triggered in 2020 by the health crisis. The explosion of telecommuting and e-commerce Demand for cardboard and tensions in the timber sector have also increased.

Construction takes a hit, as are furniture companies, with persistent stock depletion, such as at Ikea.

Publishers do not have paper to print the books.

Another factor exacerbates it: very few factories supply most of the raw materials processed. This summer the arrest of a company in USA specializing in a rare plastic used in perfumery has had effects throughout the chain.

Some manufacturers could solve it by turning to other materials, but this implies adjustments in the factories, explains Yann De Feraudy, president of France Supply Chain and director of operations of the Rocher group (Petit Bateau brands, Yves Rocher). “Now you have to order three months in advance. Prices go up until the moment when there are no more ”materials available.

Factory stoppages

The pandemic has exposed the limits of the global “dependency” of Southeast Asian factories, according to Jonathan Owens, a logistics expert at the British University of Salford and a supporter of repatriating some productions “although most of the raw materials remain. coming mainly from the Far East ”.

The lockdowns have caused factories to close, blocking sectors such as textiles in Vietnam or electronics and automobiles in China.

In products like semiconductors, these closures have snowballed in auto assembly plants. The global auto sector is expected to lose US $ 210 billion (180.8 billion euros) in 2021, according to cabinet Alix Partners.

They are also concerned about cyberattacks, natural disasters or power cuts in China, for lack of coal or to catch up on carbon emissions.

Traffic jams in ports

“It took two months for European secondary ports to recover from the blockade of the Suez Canal” by a container ship that was immobilized for six days in March on this crucial route for international maritime trade, recalls Jonathan Owens.

The Chinese port of Ningbo-Zhoushan, 250 km from Shanghai, third in the world in terms of shipments, closed for two weeks in August due to a COVID-19 outbreak. “As a consequence, the containers that should be in Egypt at that time were blocked in China“, Add. The same happened in May with the closure of the Chinese port of Yantian.

Add in the increasingly violent typhoons, additional customs controls in the UK with Brexit and new sanitary measures for crews and goods.

In addition, containers that cannot leave due to lack of cargo accumulate in the import ports. As a result, there is a shortage at export ports in China. “Using air travel would cost billions,” says Owens.

The port of Los Angeles (in the United States), where 40% of the containers destined for the United States arrive, is forced to operate 24 hours a day to reduce waiting lines.

In Europe, several giant container ships with Christmas items have failed to unload at the British port of Felixstowe and have been diverted to Rotterdam or Amsterdam.

Overcrowded warehouses

“We are reaching the peak of the Christmas season, but products that should have arrived two months ago are being downloaded” now, Jonathan Owens details.

The truck driver shortage complicates it further. At United Kingdom, the government has decided to grant temporary visas but candidates are in short supply.