Logistics and Supply Chain Technology Report 2021

Chapter 1: Operations in APAC and Challenges in China

From global shifts in trade patterns to depressed economic activity and radical shifts in the ways we live and work, the impact of COVID-19 has caused many across Asia-Pacific (APAC) to re-evaluate their supply chain operations and place greater emphasis upon a global value chain. Though it still remains to be seen whether recent changes in consumption and travel will result in a sustained cultural shift in business operations, it has become abundantly clear to those operating across APAC that building greater flexibility into strategy is imperative if they are to absorb future shocks and keep pace with competitors. Extreme weather conditions, technical system disruption, and renewed COVID-19 cases tied to the Delta variant across the region continue to stoke persistent fears around the centrality of a single country to global logistics operations. Even limited disruption in service time can have wide-ranging impacts downstream, stalling deliveries and leading to ballooning transport costs amid production delays and containers full of back-ordered goods. Indeed, due to lockdown decisions made at the onset of the COVID-19 pandemic, the world faces ongoing container shortages across Asia and Europe. With lockdown restrictions hindering the travel of containers to Asia whilst demand for capacity continued to increase, businesses across APAC quickly found themselves in the midst of a compounding crisis. Limited ability to book available containers, either due to the slowdown in production or the elevated prices for purchase or leasing of containers continues to create congestion across Asia and the Pacific. With the freight industry facing these global shortages, container vessel congestion stemming from previous slowdowns as well as the obstruction of the Suez Canal by the Ever Given container ship in March 2021, have also had ripple effects across the supply chain, with strain driving up shipping rates and causing delays around the world as overbooked carriers face additional pressure due to Chinese port closures. The grounding of the Ever Given in the canal waterway has been estimated to have held up US $9.6 billion worth of trade across one of the world’s most important trading routes, resulting in a backlog that is still being dealt with months after the event.