By Eric Huang 

High prices force people to reduce unnecessary consumption, which will give the global supply chain a respite and enable it to regain its balance in 2022.

At the end of September, most people believed that the two factors of China's long holidays and the power supply crisis may ease the serious shortage of shipping spaces and port congestion caused by the epidemic in the past one and a half years, and may further increase the sky-high freight rate back to the earth. However, nearly a month has passed. Not only did these crises remain unresolved, but the global supply chain still suffers the lack of spaces, coupled with the imbalance in the supply of trucks at ports, resulting in the inability to supply seasonal products. On the sales time in Halloween, Thanksgiving & Christmas Days, People have to worry about the empty shelves of seasonal products, making this winter particularly cold!

This is a typical imbalance between supply and demand. During the outbreak of the epidemic, everyone was afraid to spend money randomly, because job was affected, and income was also reduced a lot. It was full of uncertainty about the future, and they did not know when life would return to normal. More importantly, they did not know when they can be back to work. However, after the lock down has been lifted because the vaccine coverage rate has reached a certain level in many countries, retaliatory consumption behaviors have appeared one after another. This is why the global economy has experienced a strong recovery in 2021. The International Monetary Fund predicts that the global economic growth rate will reach 6% in 2021. According to a shipping intelligence report, from January to August 2021, the additional global demand is equivalent to a load of 119 million containers, an increase of 6% over the same period in 2019.

But the global supply chain is unable to withstand this rapidly increasing demand. Nearly 600 container ships are trapped outside berthing areas around the world-almost twice the number at the beginning of this year. The president of the United States has repeatedly declared the urgency of solving the supply chain problem, which reflects the seriousness of the problem. In addition to the inefficient operation of the terminal, there is also the problem of lack of workers and chassis. Recently, there has been a serious shortage of truck drivers in Europe. The United Kingdom lacks about 100,000 drivers, partly because of the impact of Brexit - many drivers from Eastern Europe decide to return to work in Europe. But Germany lacks about 80,000 drivers and the EU lacks 400,000 drivers in total. This makes the problem of the entire supply chain worse.

Another really important issue is the lack of raw materials and key components. Suppliers did not predict the strong demand due to the relief of the epidemic, and the much lower production efficiency in the past period due to the impact of the epidemic. It causes the panic buying and makes the prices go to the sky-high but the supply is still scant which eventually lead to stagnant inflation. And as governments try to fulfill their previous carbon emission targets, they have no choice but to be concerned about the energy shortages issue that have recently occurred in China and other countries. This means that many products cannot be completed. A recent high-profile example is that due to a shortage of chips, Apple cancelled an order for 10 million iPhone 13s, which is equivalent to 11% of global production.

However, some economists believe that due to the high prices during this period, people will be forced to save money and spend money on essential items related to survival, such as gasoline or heating, while relatively reducing consumption of other non-essential items. This will ease the supply chain pressure. Although we are too late to see this improvement in this Christmas time, it is certainly a good thing for the global supply chain in 2022 and will help bring the supply chain back to a balanced status!

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