The Voyager

Your Weekly Dose of Trade News

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Your Weekly Dose of Trade News

Supply Chain Disruptions : Current Status

The coronavirus pandemic caused huge supply chain disruptions.

Manufacturing, transportation and logistics were all affected leading
to scarcity of many products and high price increases. It started with
the closure of factories due to lockdowns in different parts of the
world. Shipping companies cut their schedules in response,
anticipating a demand drop, but the demand for household products
surged instead. This clogged the system for transporting goods to
factories that manufactured these products. Finished goods were piled
up in warehouses and ports as well due to shortage of shipping
containers. We look at the some of the key indicators that will help us
analyze what the current situation is.
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 The Voyager
Your Weekly Dose of Trade News

In the news recently

Ships and Ports

In October, the cargo shipping costs tracked by the Baltic Exchange Dry
index hit their highest since 2008, but they are now down a third of their
high in the past month.
Data from shipbroker Alibra Shipping shows 6 month contracts for Pacific
Ocean routes cost $52,500 a day for capesizes, the largest dry cargo
vessels. But 12 month and 2 year contracts cost $36,000 and $26,000
respectively, hinting that the market expects port congestion to reduce.

Inventories
Global Delivery time Index was down to 34.8 last month. A number below
50 on this index implies that deliveries are taking longer, and October's
reading was the worst in recent records.
Purchasing managers orders to inventory ratio in Euro Zone has been
declining, hinting the supplies for goods may increase relative to the
demand and reduce the shortage.

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Your Weekly Dose of Trade News

In the news recently

Chip Shortages
Chip shortages will cut light vehicle production by 5 million units globally
this year according to IHS Markit Estimates. Qualcomm and AMD expect
chip shortages to persist until the second half of 2022, while Intel
predicts they will persist through 2023.
Vaccination rates in key manufacturing countries including chip suppliers
like Malaysia and Taiwan are increasing. UBS estimates 80% vaccination
rate in Vietnam, Taiwan and Malaysia by January 2022.

Commodity Prices
Prices of paper pulp surged globally early this year, causing shortages of
packaging materials. However, Shanghai traded wood pulp futures are
down 30% since May.
US Futures for lumber, an important housebuilding component are down
60% below springtime highs.
Owing to increase in coal supply, price of high quality thermal coal at
Newcastle port has tumbled more than a third since last month, while
thermal coal futures in China have lost almost 50% since the rise in mid-
October.
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