BRACE YOURSELF! The ‘Mother of All Supply Chain Shocks’ Is Coming as China Shuts Down Major Ports Due to Pandemic
As if there wasn’t enough bad economic news — The War Room opened their first hour on Friday warning viewers of the coming “mother of all supply chain shocks.”
Zero Hedge reported on the coming Biden crisis on Thursday.
And, as we have also discussed in recent weeks, one place where this growth slowdown is emerging – besides the upcoming deterioration in US consumption where spending is now being funded to record rates by credit cards before it encounters a troubling air pocket – is China and its “covid-zero” policy in general, and its covid-locked down ports in particular.
But what until recently was a minority view confined to our modest website, has since expanded and as Bloomberg writes overnight, the effects of restrictions in China as the country maintains its Covid-zero policy “are starting to hit supply chains in the region.” As a result of the slow movement of goods through some of the country’s busiest and most important ports means shippers are now diverting to Shanghai, causing the types of knock-on delays at the world’s biggest container port that led to massive congestion bottlnecks last summer that eventually translated into a record number of container ships waiting off the coast of California, a glut that hasn’t been cleared to this day.
With sailing schedules already facing delays of about a week, freight forwarders warn of the impact on already back-logged gateways in Europe and the US and is also why HSBC economists are warning that the world economy could be headed for the “mother of all” supply chain shocks if the highly infectious omicron variant which is already swamping much of the global economy spreads across Asia, especially China, at which point disruption to manufacturing will be inevitable.
“Temporary, one would hope, but hugely disruptive all the same” in the next few months, they wrote in a research note this week first noted by Bloomberg.