HIGHLIGHTS
- According to Russell Group, the current Chinese power shortages that have gripped the country could see US$120 billion of trade flows delayed.
- Enterprises start taking preventative action to ensure that their supply chains are resilient to disruption, as trade disruption will be a continuing issue in the near future.
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According to the risk modelling company, Russell Group, the current Chinese power shortages that have gripped the country could see US$120 billion of trade flows delayed.
Nearly 60% of China’s economy uses thermal power, but supply is being disrupted due to the pandemic, as well as pressure to reduce emissions and coal imports which is caused by trade tensions with Australia.
Some of China’s key ports, including Ningbo, Guangzhou, Yantian and Shekou, are located within the affected provinces, while Shanghai and Ningbo also process many of the container exports from the Jiangsu province.
ICB’s (Integrated Circuit Boards) were the most impacted commodity at US$1.5 billion which is a huge shock to suppliers and consumers as the world continues to reeling from the global chip shortage.
In addition, the power shortage has already affected the provinces of Jiangsu, Guangdong and Zhejiang, which have seen factories producing steel, plastics, home appliances, chemicals and textiles shut down or move to a three-day week.
Telephone equipment (US$1.3 billion) and clothing (US$635 million) are other key commodities that will be impacted if the disruption continues for more than a month, which will therefore affect many companies rushing to ensure they are stocked up with key products for the holiday season.
“At the moment, it seems that nearly every week or so, there is a major trade disruption at one of the world’s largest ports whether that is China or the United States. Enterprises start taking preventative action to ensure that their supply chains are resilient to disruption, as trade disruption will be a continuing issue in the near future.” commented Suki Basi, Managing Director of Russell Group.
Manh Nguyen
FURTHER READING
Power shortage in China – a danger to the global supply chain
