Supply Chain Changes in the 2nd Half of 2022

While the first half of the year has seen its share of new and continued disruptions, we take a look at five growing trends that will impact global manufacturing in the second half of the year.

China

The months-long shutdowns of Shanghai and Beijing had a significant impact on both manufacturing and supply chains in China and across the entire world. When China is hit with the next wave of COVID, we’ll see additional disruptions in global manufacturing, supply chains and logistics. While China remains the world’s preferred manufacturer we are seeing an increasing move to regionalisation and localisation as manufacturers distance themselves from the main centre plants to a more distributed manufacturing model.

Global shipping crisis

As Chinese manufacturing resumes, we will see renewed port congestion, first in China and then in the USA and Europe. Shipping rates will continue to climb, and this will be further complicated by the loss of the rail link connecting China to Europe due to the war in Ukraine. The sea freight system will be further stressed, with more than a million additional containers that need to be moved from China to Europe on sea routes. One can only imagine what the impact will be on container ship tracking.

Shipping costs will increase, shipping times will extend and we envisage the global shipping crisis to continue through the remainder of 2022.

Russian war in Ukraine  

Disruptions in the manufacturing and food production sectors in the Ukraine continue to spread. Neon gas production disruptions are further impacting semiconductor production and the Russian oil and gas restrictions are increasingly impacting Europe.

These disruptions are having a massive impact, and fear is that these disruptions will drive inflation that will put and keep Europe in a recession. 

FSO Safer Oil Tanker – Could this be the largest-ever oil-related environmental disaster?

There is a storage tanker holding more than 1.1 million barrels of oil off the coast of Yemen. Maintenance to the boat was halted due to the Yemen civil war, and it is possible that the tanker will break up when storms hit in September, if not sooner. If this happens, it will be the largest man-made environmental disaster in the history of the world. Oil will cover the Yemen coast down to Somalia

Due to saltwater desalination being the way most of the water in the region is generated, this pending disaster in Africa will cause an estimated $40 billion dollars of damage and create a massive humanitarian crisis.

We have a choice to make and decide which one is more important: lower cost for unpredictable supply or higher early investment for more reliable manufacturing as a whole.  

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