Supply chain disruptions and China’s electricity crisis threaten to spoil the holiday experience

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KEY POINTS

  • Shipments of everything from smartphones to cars to Christmas toys are delayed
  • China’s energy crisis adds to production disruptions
  • Retailers ask customers to order well in advance of the holiday season

As if the chaos and confusion caused by the COVID-19 pandemic weren’t enough, another crisis is hitting the West as the start of the holiday season approaches. An electrical crisis at the global factory in China and supply chain disruptions are expected to lead to shortages for almost everything we take for granted in modern life, from smartphones to computer chips to cars. Christmas gifts, especially children’s toys, are likely to be scarce, leaving Santa with more sadness than joy as he prepares to go from house to house.

How did we get here? On the one hand, there is the maritime transport crisis. Ninety percent of global trade now passes by sea, and a tangled set of factors, from a shortage of containers to massive traffic jams in the world’s ports, contribute to excessive delays and suffocating traffic. the supply of goods. With just-in-time supply chains, even a delay of a few days on one of the “links” can have a cascading effect, including lengthening last mile delivery times.

It’s such a shame that some large retailers go so far as to contract their own ships to get their orders to their stores on time.

Retailers are already panicking and some say only 40% of what they ordered gets to them on time, according to CBC, raising concerns that shortages will be fully addressed before the holiday shopping season. Then there is the electricity crisis in China, which complicates matters, even raising the worrying specter of a halt in the production of goods.

Coal shortages and the attempt to meet emissions targets sparked the crisis, and Beijing has already asked factories to limit their energy use. Power outages and power rationing have already hit home users, even trapping people in elevators.

The crisis worsens when other manufacturers in Asia like Bangladesh and Vietnam fail to close China’s production gap and even if they do, it would be difficult to ask strained supply chains to pull themselves apart. redirect and adapt over time.

The smartphone market, for example, is expected to grow slower this year. Counterpoint Research estimates that the total volume of smartphone shipments will increase 6% to 1.41 billion units this year, from its previous estimate of 9%, or 1.45 billion units, amid a shortage of components. keys.

For the consumer trying to extricate themselves from the economic devastation caused by the pandemic, the upward pressure on dealys prices adds to the miseries already caused by rising inflation. Oh, and let’s not forget about rising oil prices!

Reports say major retail chains, such as Walmart, are asking parents to order well before Christmas, so their kids can still receive their holiday gifts and in time for the big day. The pandemic has taken a lot of the fun away from kids and what they sure wouldn’t want to do is miss Santa Claus bringing in treats. But it’s starting to sound like a tough request.

China has threatened economic backlash on a range of Australian exports since Canberra requested an investigation into the Covid-19 pandemic Photo credit: AFP / SAEED KHAN

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