lobal Supply Chain Problems Worsen

Global$$ supply$-$chain bottlenecks are feeding on one$$ another, with shortages of components and surging prices of critical raw materials squeezing manufacturers around the world. Factories and retailers in Western economies that have largely emerged from lockdowns are eager for finished$$ products, raw materials and components from longtime suppliers in Asia and elsewhere. But many countries in Asia are still in the throes of Covid$$ lockdowns, constricting their ability to meet demand.

Part $2$

$$Meanwhile$,$ global labor$$ shortages, often the result of people leaving the workforce during the$$ pandemic, are generating additional production obstacles. At the heart of the gridlock is$$ China, the$$ world's largest trading nation. Arriving ships often must quarantine for a week or more before they are allowed to dock. Disruptions to customs and port services add to delays. The more ships wait on the inbound side at Chinese$$ ports, the longer it takes for them to start out again from China to the rest of the$$ world, eagerly waiting for$$ Chinese$-$made electronics, clothing and toys. Freight rates on the heavily trafficked$$ China$-$North America route more than doubled this year.

Part $3$

Beyond$$ China, Covid$-$related factory closures in Malaysia have hit chip supplies to car makers in a semiconductor market already hit by outages in$$ Texas, Japan, and Taiwan. In$$ Indonesia, mining companies want more trucks to feed the$$ world's rising demand for coal and minerals. Yet the waiting list for new truck deliveries is $9$ months. These$$ supply$-$chain problems make it harder to deliver the fuel and materials that would help resolve supply problems$$ elsewhere, reinforcing the bottlenecks. Strikes and Covid cases among port workers in Australia have curtailed operations. Passenger flights to the$$ country, which used to be an option for air cargo$$ shippers, are still mostly halted.

Part $4$

The global auto industry will lose $7\mathrm{.}7$ million vehicle sales$$ world$-$wide, $10\%$ of expected production in $2021($costing $$210$ billion in$$ revenue$),$ because of the chip shortage.$"$We are not$$ demand$-$constrained, we are$$ supply$-$constrained," said$$ Daimler's CEO, adding that the chip supply squeeze would be felt into $2023.$

$$Source: The Wall Street Journal$($Sept$.23,2021),($Oct$.9-10,2021)$ and$($Nov$.12,2021).$

Part $5$

Critical Thinking Questions

$1.$ Global supply bottlenecks peaked in late $2021$ because

A$.$

global labor shortages persisted after COVID.

B$.$

demand for goods increased from consumers.

C$.$

delays in ports disrupted unloading.

D$.$

many Asian countries were still in lockdowns at that point.

E$.$

all of these reasons are true.

Part $6$

$2.$ Computer chip and semiconductor shortages

A$.$

meant that Daimler$($Mercedes Benz$)$ had to close its plants until $2023.$

B$.$

impacted auto industry production.

C$.$

were due to truck shortages in Indonesia.

D$.$

were the result of Chinese port disruptions.

E$.$

could all be blamed on Malaysia.