Cargo airlines warn of supply chain disruption due to 5G rollout in the U.S.
Air cargo carriers have warned that the switch-on of 5G services will cause major disruptions in the industry, leading to shipping delays and high costs for customers if steps are not taken by telecommunications companies to remove the interference with safety equipment on aircraft. AT&T and Verizon announced that they will delay the rollout at towers near some airports, after facing pressure from the White House.
Companies fear that the 5G signals will disrupt the aircraft navigation systems, especially those used in bad weather conditions. More than 5,400 cargo flights per year face delays, diversions or cancellations if Federal Aviation Administration (FAA) directives prohibit landings in low-visibility conditions at airports near to cellular towers because of the 5G startup, according to a statement from Airlines for America.
Airlines are calling for the FAA to identify and address the cellular stations close to airports to ensure safety and reduce disruption. Steve Alternam, president of the Cargo Airline Association said that “the impact on the cargo sector would be dramatic and potentially devastating. To the extent services are disrupted due to 5G interference, the ripple effects through the economy will be significant.”
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China’s zero-covid policy could interfere with global supply chains again
According to an economist from Moody’s Analytics, supply chain disruptions are likely to continue as a result of China’s strict Covid-19 policy. The Chinese government’s approach of stamping out any signs of the virus could prove to be costly for the economy this year. With rising Omicron cases, China has implemented various lockdowns, meaning business activity is halted, leaving supply chains to suffer.
The supply chain bottlenecks that the world has faced since the start of the pandemic are expected to “materially ease in the early months of this year”, said Katrina Ell, a senior economist at Moody’s Analytics, however she notes that China’s Covid-19 strategy and “how they tend to shut down important ports and factories… really increases disruption.” Shippers are worried that this will have significant impacts on the industry, as last year, a terminal at the world’s third busiest port was shut due to Covid-19 restrictions.
Goldman Sachs has already cut its 2022 forecast for China’s economic growth, due to the likelihood of business operations being restricted in order to contain Omicron cases of the virus. Katrina Ell said that “the zero-Covid policy means that the economic recovery is a bit more bumpy, particularly on the consumption side of things.”
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Trucker vaccine rule is driving up prices
New rules which require truckers crossing the Canada- U.S. border to show proof of vaccination are impacting shipping capacity as well as the cost of moving goods. The regulations were introduced on January 15th meaning border agents now have the power to turn away unvaccinated U.S. drivers, which has been criticized by industry experts who say this could slow down supply chains which are already under pressure.
The cost of moving goods from California and Arizona to Canada jumped by 25% last week alone, as fewer trucks are crossing the border, according to George Pitsikoulis, president and chief executive officer of Canadawide Fruits. He said: “the lower the supply, the higher the price.” Shipping is likely to be affected on the American side as well, with the U.S. set to implement a vaccine mandate in the coming days.
Importers in Canada rely on trucks to transport fruit arriving from South America to ports in the northeastern U.S. The shortage of containers and truck drivers is already causing delays of up to two weeks, with this likely to become worse. It is expected that companies will have to pay up to secure vaccinated drivers to guarantee the delivery of their goods, but this will push up costs massively, according to Ron Lemaire, president of the Canadian Produce Marketing Association.
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