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Workers inspect brand tags on apparel ready for packaging at a textile factory of Texport Industries in Hindupur town in the southern state of Andhra Pradesh, India, Feb 9, 2022. --Photo Agencies

Supply chains in Asia shaken but unshattered

(China Daily/ANN) -- A range of factors have helped Asia’s supply chains weather the COVID-19 pandemic better than those in other parts of the world. But vigilance is needed to maintain these vital trade links.
The pandemic has created supply and demand mismatches and reallocated global demand from services to goods. As a result, supply disruptions have emerged alongside the global recovery.
Asia, however, has been less affected than other regions, as reflected by smaller increases in delivery times by suppliers in the manufacturing sector from February to April 2020. Delivery times have remained moderate since May 2020.
What’s more, deliveries are now faster than they were on average globally from 2016 to 2021 in China, Indonesia, India and Thailand. In the Republic of Korea, the Philippines, Vietnam and Malaysia, delivery times are longer, but less than in the euro area, the United States and several other advanced economies.
There are at least three reasons why Asia’s supply chains have not been disrupted to the same extent as elsewhere.
First, demand in Asia did not shift from services to goods as much as it did in the US. Services activity in the region continued to be hindered by COVID-19 mobility restrictions in 2021, but reduced spending on services did not boost purchases of goods as much as it did in the US and in some other advanced economies. This was partly because disposable income recovered more slowly in Asia’s developing countries than it did in advanced economies, and because fiscal stimulus especially direct cash transfers to households was much larger in the US.
Second, the upstream position of some Asian economies protected them from supply-chain bottlenecks. Bottlenecks at any point along a value chain can affect downstream industries. Upstream industries are thus somewhat more sheltered from disruptions. This includes the manufacturing of inputs for electronics, which is the backbone industry for several Asian economies.
Third, the region has also been less affected by rising shipping costs. The cost of shipping a container from Bangkok to main ports in Asia remained about 2.5 times above pre-pandemic levels for most of 2021. In contrast, increased demand for shipping from China to advanced economies inflated freight rates to up to 15 times their pre-pandemic levels in September last year.

 


(Latest Update May 25, 2022)


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