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Outside In | By all means, save Christmas – but don’t blame the global supply chain
- As logistical chaos threatens Christmases across the US and UK, the lesson is not that the global supply chain should be dismantled but that, in modern manufacturing, small hiccups can cause big disruptions
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Reading the headlines, you could be forgiven for thinking that world trade is gummed up, with supply chains in an unprecedented meltdown. US President Joe Biden and British Prime Minister Boris Johnson have launched plans to “save Christmas” as ports are clogged, and shoppers are warned to buy now before shelves are bare.
Others have warned that the final nail is being rammed into the coffin of the long, complex supply chains that have fuelled global growth over the past four decades.
They say the supply chain dislocations that have lifted sea freight rates tenfold since the start of the pandemic are unprecedented, and point inevitably to a localisation of production, the “nearshoring” or onshoring of multinational operations, and a general simplification of supply chains that commonly span dozens of countries.
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Some say it is the harbinger of decoupling between the US and Chinese economies. For sure, it is a further sting in the tail of the Covid-19 pandemic as we begin to smell the first signs of recovery.
Certainly, the short-term disruption is extraordinary. But is it really likely to lead in the medium term to structural changes in the way we trade? My guess is no.
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Chinese manufacturing thrown into disarray as country's electricity crisis rolls on
Chinese manufacturing thrown into disarray as country's electricity crisis rolls on
There is no doubt that the perfect storm of disruptive forces has been shocking, and would have been hard to anticipate even as Covid-19 engulfed the global economy in the first half of last year.
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