Yu Fangping | Coûtphoto | Médias de Barcroft | Getty Images
Omicron is “another test of the toughness” for already strained supply chains, said Per Hong, senior partner at Kearney consulting firm.
“Supply chains remain vulnerable to disruption from the pandemic, with the Omicron variant emphasizing that the crisis is not over yet,” Sian Fenner, chief economist for Asia at Oxford Economics, said on Wednesday in a note. Wednesday.
Since then, the strain has been found among cases in the UK, France, Israel, Belgium, the Netherlands, Germany, Italy, Australia, Canada and Hong Kong.
“Ripple effects” of blockages
“China should double its ‘zero-COVID’ policy which in the past has included massive shutdowns of entire cities, forced quarantines, as well as strict controls at ports, including monitoring of ships and cargo, to prevent the case entry, ”he wrote.
Other analysts have also warned that China may step up its zero-Covid measures with the emergence of the omicron.
“If this happens, not only will shipments be limited, but we are sure to see even more shortages of key manufacturing components and expanded order books for major electronics, automotive and consumer products depending on the regions affected.” , did he declare.
Some of the busiest ports in the world are in China. Of the 10 busiest ports, seven are in China, according to data from the World Shipping Council. Shanghai ranks first, Ningbo-Zhoushan third and Shenzhen fourth, while Hong Kong is the eighth busiest port last year.
True, the WHO has said it remains unclear whether the omicron variant causes more severe disease than other strains, such as delta.
“Lots of unknowns, but Omicron [is] certainly emerging as yet another test of resilience for global supply chains that were already under strain and in the midst of a long healing process, ”Hong said.
Omicron could delay resumption of regional exports
“Even though more production is online, there are still logistical challenges, especially in maritime transport but also in air freight,” she said. This includes constraints on short-term marine supply, due to the “several-year lag” between new vessel orders and deliveries.
Globally, less than half of ships arrived on time in 2021, and late ship delays consistently add more than a week to delivery times, up from around four days in 2018 and 2019, according to Oxford Economics .
But, if omicron puts the brakes on the recovery of the supply chain, it could pose a threat to the recovery of regional exports, analysts at TS Lombard said in a note on Monday.
“Most governments in the region are likely to resist the reimposition of severe restrictions, but the bottom line is that supply chains will remain under pressure as long as the threat of Covid persists,” they said.
If omicron hits supply chains, the impact on Asia’s gross domestic product is expected to be down 1.6 percentage points for next year, Oxford Economics said.