The Russia Ukraine war has broken global food supply chain as well as causing idled factories and unleashed inflationary forces.
In the usually routine world of global logistics, the shipping system underpins globalisation: Production on one side of the planet, and consumption on the other.
Global supply chains are now knotting up from China to Denmark to US, sparking re-examinations of things as macro as globalisation itself and micro as trucking efficiency around American ports.
Economists are assessing the more granular, short-term shifts the pandemic and Russia’s war in Ukraine are forcing on consumption, investment, production and trade.
Some observers say now is a good time to focus on different metrics than traditional measures of employment, prices and gross domestic product.
“The way we look at the global economy needs to change,” said Steven Barrow, a currency strategist at Standard Bank. “No longer should we look at growth, inflation and monetary policy through the lens of demand. Instead, it is supply that’s key.”
Many economists have developed indexes or colourful heat maps to show the degree of stress on supply lines.
A Moody’s Analytics measure shows supply stress in the world’s two biggest economies – the US and China – is still hovering well above the pre-pandemic norm.
Disruptions stemming from the Ukraine conflict steepened those graph lines in February. But now the blame lies primarily with China’s Covid-related woes, which have reportedly forced 15% more ships to wait in waters off the ports of Shanghai than at the same time last year.
China’s stringent lockdowns to curb Covid-19 infections are taking a heavy toll on the economy and roiling global supply chains.
On the receiving end of many shipments from China are the ports of Los Angeles and Long Beach, which handle about 42% of all US containerised trade with East Asia.
The share of shipping containers dwelling at the ports for more than five days rose last month to 38.7% from 34.3% in February, according to data from the Pacific Merchant Shipping Association.
Congestion is also worsening at European ports, which are suffering more than their American counterparts from disruptions tied to the war in Ukraine.
The corporate victims of the snarls are piling up. Apple predicted that supply constraints would cost $4bn to $8bn in revenue this quarter.
Not everyone will be a loser in year three of the global supply-chain drama, though.
For the container shipping industry, the profit windfall may hit $300bn this year, up from $214bn in 2021, according to Drewry, a shipping research and consulting firm in London.
