Supply chain chaos takes a toll on post-Covid global recovery

The Covid-19 pandemic continues to wreak havoc on global supply chains, with many countries suffering from a shortage of raw materials, energy, and final products, further disrupting governments’ post-pandemic recovery plans.

From China to the US, many sectors are experiencing shortages of everything from coal to toilet paper. 

Before the pandemic, the demand for chips was already rising due to 5G technology. The pandemic further exacerbated the shortage as people started to work remotely and spent more time in front of televisions, computers and game consoles.

The disruption caused by the pandemic is being felt in several ways across the world. Here are some countries that have suffered from various shortages:

China

China is enduring a worsening energy crunch as power prices hit record highs in recent weeks, which is expected to affect the world’s second largest economy and top exporter.

Although China vowed to control new coal production and new coal-fired power capacity in August as part of its commitments to curb pollution and tackle global warming, Beijing has recently decided to allow coal-fired power plants to pass on the high costs of generation to some end-users via market-driven electricity prices.

Together with skyrocketing energy prices, heavy rain and flooding has devastated coal mines in northern China's Shanxi province, with at least 60 coal mines temporarily closing in the province due to the catastrophe. Meanwhile, over twenty provinces have experienced power cuts. 

Under the current energy crunch, the production of paper, food, toys, chips, and textiles have been disrupted.

Despite huge investments in renewable energy, more than half of China's electricity is sourced from coal, as prices sharply rise across the world.

Energy companies are being forced to reduce their output as the high costs can’t be passed to Chinese consumers due to a strict price cap. 

While demand for Chinese goods is surging, factories have been asked to halt their production or reduce their energy use. 

The US

Last week, a White House official warned Americans could face higher prices and empty shelves for the upcoming Christmas season, as global supply bottlenecks choke US ports.

American consumers may need to be flexible and patient, White House officials said.

"There will be things that people can't get," a senior White House official told Reuters, when asked about holiday shopping.

"At the same time, a lot of these goods are hopefully substitutable by other things...I don't think there's any real reason to be panicked, but we all feel the frustration and there's a certain need for patience to help get through a relatively short period of time."

Because of supply chain problems, the US retail giant Costco re-imposed a limit for selling some key products including toilet paper, bottled water, and some cleaning products. The toy industry has also been affected. 

Pressure on US ports have increased in recent months as 73 ships had to queue outside of Los Angeles port in September. 

Alongside Los Angeles, Long Beach port in California has started to operate 24/7 to ease bottlenecks of transportation. Four out of 10 container ships arriving in the US pass through these two ports.

India

The automobile industry is being hit hard by a shortage of computer chips that has slowed production and is set to drag on for months. India’s biggest car production company Maruti Suzuki’s output dropped due to the chip shortage.

India is also suffering from an energy crisis, as coal supplies to thermal power plants are running low. According to the country’s central electricity authority, almost 80 percent of power plants, which convert heat from coal to electricity, were in a “supercritical” or critical stage, meaning stocks could run out in less than five days.

The states of Rajasthan, Jharkhand and Bihar have recently been experiencing electricity cuts of up to 14 hours.

Maharashtra state has closed 13 thermal power plants while three power plants in Punjab have halted electricity generation. 

Brazil

As opposed to others, Brazil’s current problems are related to the severe drought which depleted the nation’s harvest this year.

The frosts in August are expected to cause a loss of around four percent to the coffee crop production in the next season, according to forecaster Tropical Research Services (TRS).

High shipping costs and lack of shipping containers are other challenges for Brazilian coffee producers.

With Brazil being the world’s largest coffee producer and exporter, prices are set to increase in cafes across the world.

Nigeria

In Nigeria, there is a shortage of Liquefied Petroleum Gas (LPG), which is commonly used in kitchens.

Although the country has the largest natural gas reserves in Africa, the price of LPG increased by 60 percent between April and July.

Worsening inflation and rising gas prices have forced many households to use charcoal and firewood for cooking.

Lebanon

Lebanon is experiencing a punishing economic crisis, as most of its society has been suffering from prolonged energy cuts, inflation and shortages of medicines, water and fuel.

Since late 2019, the Lebanese lira has lost nearly 90 percent of its value, as poverty soared and the banking system has been paralysed. The IMF estimates the Lebanese economy shrank by 25 percent last year, with inflation hitting a rate of nearly 85 percent.

In July, Lebanon's medicine importers said they had run out of hundreds of essential drugs and warned of more shortages, as the country's dire financial crisis battered the health sector.

Nearly three-quarters of Lebanese society has fallen into poverty amid the massive economic crisis.