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Supply chain pressure persists, driving permanent shifts in commerce: ING


Pressure on global supply chains will persist until 2022: ING economists

Global supply chains already skewed by the pandemic have been further disrupted by the Russian-Ukrainian war and that pressure will persist through 2022, according to senior economists and head of commodities strategy at ING.

Here are the best quotes on supply chains and trade from ING economists:

  1. “Improving supply chains are unlikely to last with war and the Covid zero policy: Global goods trade faces many headwinds this year. Although the reliability of global timetables, tracked by Sea -Intelligence, continues to improve slowly, reaching 35.9% in March, compared to 34.4% the previous month, it remains below 2021 levels. And remember that if the congestion data for mars capture the early effects of the war in Ukraine, they do not reflect the lockdown in Shanghai.

  2. “With traffic jams having increased significantly in Chinese ports due to the zero Covid policy in China, and in the North Sea due to the war in Ukraine, we do not expect the reliability of global timetables to improve much. More from here for now. For the North Sea region, sanctions against Russia, along with voluntary bans, are leading to further congestion, suggesting more long-lasting problems for supply chains, as navigation and air cargo systems have to be reorganized, leading to longer transport times.

  3. “The impact of a long lockdown in the world’s largest port and biggest export zone will later be seen in other parts of the world: as congestion at the bottleneck of LA Longbeach on the coast western United States has improved significantly in the first few months of the year, we expect the pressure to mount again in the next two months due to the increasing number of ships waiting to dock outside the Chinese ports, especially in Shanghai.”

  4. “Input and labor shortages compound the problem: Material and labor shortages also continue to hamper production and transportation. This adds to existing material bottlenecks caused by the pandemic, while the sharp increase in prices makes it difficult for manufacturers to accurately calculate for this year and commit to delivery prices to customers much later.”

  5. “The permanent changes in trade flows are facing a bumpy transition phase: following the war in Ukraine, we believe that trade flows will be significantly reshaped as market participants who previously bought raw materials and goods from Russia are looking for alternatives However, not everything can be offset and supply in other regions may not always increase instantly Overall, we expect trade flows from the Russia to Western countries that have sanctioned Russia permanently cease, with some countries in Asia, Africa and South America compensating for the loss of Western exports.”

  6. “The EU’s proposed ban on Russian oil would be important for global markets: the EU is the main destination for Russian oil, importing around 2.3 mb/d in 2021, equivalent to around 26% of imports EU crude oil totals. The phasing out of Russian oil would mean that European buyers would have time to look for alternative sources, and thus allow for a more orderly shift in trade flows.”

  7. “Trade routes – temporary bypass: the Black Sea region is not only the ‘breadbasket’ region, but is also one of 14 global choke points, identified by Chatham House, through which quantities transit world food supply. With Ukrainian ports closed to war, it is currently extremely difficult to get grain exports through this route.”

  8. “More self-sufficiency desired – but economically unnecessary and a time-consuming process: Another trend, which will now gain momentum, is the move towards more self-sufficiency. Yet, although making headlines, the shift to more self-sufficiency sufficiency is unlikely to show up in trade numbers at the moment because so far it has only affected certain areas deemed critical, such as microchips or certain products a lot of time to create new industrial branches. China has been on this path for years.

  9. “Ultimately, the war in Ukraine could lead to a new world economic order, characterized by more ‘friendshoring’ as US Treasury Secretary Janet Yellen has called it – trade relations with countries that have long standing, cooperate and share similar values ​​could become more valuable. Ethics may also become a more important consideration in trading.”

  10. “Overall, international trading conditions remain very challenging and the low costs and perceived low risks (both political and logistical) that have helped support the development of global supply chains have become sources of uncertainty. However, these supply chains remain intact for now. . It’s more about rerouting, diversifying suppliers and/or regions, storing and building inventory,” they added.

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