NEW DELHI : COVID-19 has once again disrupted supply chains around the world, as nations reimpose travel restrictions in response to the rapidly spreading Omicron variant. The new restrictions in Hong Kong and China, in particular, are expected to cause issues with the procurement of components for automobiles and electronic items, reported in a release.
The shortage of critical components, such as semiconductor chips has affected production despite strong demand. It has caused the cost of sourcing components and transportation to increase, further cutting into companies’ ledgers as they try to improve their logistical chains and adapt to the global situation.
Neeraj Bahl, Managing Director at Bosch Siemens India told that, the supply disruptions may cause cost escalation that would be much worse than any previous wave of the pandemic. He added that the impact of the current disruption in supplies and cost escalation could be felt in the next quarter as well.
IHS Markit, an automotive forecasting firm, has estimated the disruptions in the supply chain will cause a production loss of about 50,000 light automobiles just during the January-March quarter in India.
Several restrictions in the past two years have already caused global supply chains to completely break down. Container freight rates are hovering near all-time highs, ports have been blocked up with ships waiting to load and unload, and freight containers are stuck causing shortages, among other issues.
Multinational companies like McDonald’s, Apple, General Motors, Intel, Samsung and others have been facing production issues due to a shortage of raw materials and components.New restrictions may worsen the already fragile situation, though some industry experts express hope as early data from South Africa suggests the Omicron wave may be short-lived.