Global supply chain grapples with uncertainty amid conflicts and trade realignment

Bryan Chuang, Taipei; Vyra Wu, DIGITIMES Asia 0

Credit: AFP

The ripple effects of Russia's invasion of Ukraine and the Israel-Hamas conflict are reverberating across the global supply chain, injecting an aura of unpredictability. However, strategic realignments and risk diversification in supply chains, initiated since the onset of the US-China trade war in 2018, have notably bolstered resilience. The broader impact on global trade from the Red Sea crisis seems contained.

Taiwan, witnessing a surge in the return of local businesses and the consolidation of AI server assembly, has spurred warehouse operators to intensify investment efforts, erecting expansive logistics hubs. Anticipated growth is foreseen in shipping demands for freight handlers, container transport, handling volumes for warehouses, and rental capacities for port facilities.

Projections from Taiwan International Ports Corporation herald a historic high in 2023, eyeing total revenue reaching NT$28.1 billion. The cargo and container volumes anticipated across Taiwan's ports aim for 666 million revenue tons and 13.6 million TEU, respectively. Notably, the Port of Kaohsiung's 7th Container Terminal officially opened, with the first phase initiated in May 2023 and the second scheduled for July 2024, promising berthing capabilities for four mammoth container ships of 24,000 TEU each.

While the COVID-19 pandemic previously led to port congestion and logistical shortages, lessons learned have inspired manufacturers and transport entities to fortify contingency plans, seeking to avert a recurrence of similar crises.

Extended dwell times of container ships in ports pose schedule delays and scarcity in cargo space supply. As the post-pandemic landscape unfolds, global port congestions gradually ease alongside a tapering demand for goods. Forecasts from major international institutions indicate that global trade volume growth lags behind maritime capacity expansion.

Encouragingly, the latest Purchasing Managers' Index (PMI) for US manufacturing and services sectors reveals sustained activity in manufacturing without further decline. Despite the descent in the Manufacturing Purchasing Managers' Index in the European Union and Eurozone, upticks in retail, services, construction, and consumer confidence indices offer a silver lining.

China's industrial and consumer product sales exhibited year-on-year growth in November 2023, signaling a recuperating industrial landscape. However, persisting declines in China's consumer and producer price indices underscore lingering demand-side challenges.

Amid sluggish global economic conditions, sluggish demand for nickel impacts stainless steel and EV sectors, despite a surge in native nickel production. Nickel prices have plummeted nearly 40% from the year's commencement, with ongoing fluctuations.

Coal prices have dipped owing to decreased European demand post-energy crisis resolution, diverting coal exports towards Asia. Abundant inventories in Chinese power plants and ample hydropower resources continue to drive coal price reductions, while iron ore prices ascend on heightened demand.