- Shipping shortages and delays have already put significant pressure on the global supply chain.
- Several companies have reported losses due to chip shortages and the impact of Texas Freeze.
- Suez Canal jam is expected to push oil and commodity prices even higher.
- See more stories on the Insider business page.
Since the outbreak of the pandemic, shipping shortages and delays have threatened to disrupt the global supply chain, driving up the price of everyday goods.
Several companies including Nike, Honda, and Samsung have already said they are hampered by supply chain issues. Now, a large ship blocking the Suez Canal – the second largest shipping channel in the world – is threatening to exacerbate the crisis.
From California port delays to supply shortages caused by the Texas storm and computer chip shortages, prices are rising at buyers and options are limited as goods become increasingly difficult to obtain and produce.
Americans may have to count on a higher cost of living after the pandemic, as demand increases and producers and manufacturers struggle to keep up after reduce their workforce when sales fell at the start of the pandemic.
Scarce supply and increased demand are forcing companies to push up prices.
Honda and Toyota announced Wednesday that they would stop production at some North American plants. The car companies listed several reasons for being forced to limit production, including a petrochemical shortage due to the Texas frost, semiconductor shortage, as well as port delays.
In March, Nike reported undeveloped revenue in the third quarter that was lower than analysts ’expectations. The company said its sales were hampered by a shortage of global vessels, as well as delays in major California ports. The company’s imports have fallen 39%, Nike CEO John Donahoe said during the employment call.
Samsung told investors Wednesday that the computer-chip shortage would seriously hurt the industry going forward.
Many car and electronics companies that rely on computer chips have already begun to feel the pinch, as they delay production and have to choose which products to prioritize in manufacturing. Buyers have already begun to see price increases at retail outlets.
Grocery stores also report a reduction in imported supplies. In March, Costco told investors it was running out of imported cheese, olive oil, and seafood, as well as several other products due to port delays. .
Gas prices have skyrocketed over the past month, as demand has risen and OPEC has been slow to stimulate production in major oil-producing countries.
Hundreds of vessels prevented from crossing a narrow canal
The Suez Canal barrier accumulates on a tight global supply chain. The jam has become a major concern and has already raised prices. Oil prices rose as much as 4% on Wednesday, less than 24 hours after the port was sealed.
The waterway was blocked by one of the largest shipping lanes in the canal, which went ashore Tuesday morning. The vessel is connected at right angles to the corridor in the Egyptian canal that connects Europe and Asia.
The ship is blocking hundreds of cargo ships from passing through the waterway and forcing them to change their routes. It is not known when the issue will be resolved or what the long-term impact will look like.
Northwestern University finance professor Phillip Braun said in a note that if the port delays persist, the price of goods will continue to rise at an alarming rate.
“Approximately 10% of global trade vessels pass through the Suez Canal each year, including crude oil and refinery and liquefied natural gas,” Braun wrote. global shipping sector as well as the common pandemic. “
This is what the serial ship looks like, as seen in an Instagram post by a member of the crew on a different cargo ship.
On Wednesday afternoon, the shipping company was concerned for the detained vessel in a public statement that the vessel had been partially re-sprayed and that other vessels would be allowed to pass through as soon as it was towed to new situation.