UK and South Korea to sign deal to reinforce pandemic-damaged supply chains
This week, the United Kingdom and South Korea will sign an agreement to reinforce damaged supply lines for parts such as semiconductors. An improved trade deal is also on the cards, as Britain is looking to connect with fast growing economies in Asia. Ministers Anne-Marie Trevelyan and Yeo Han-Koo are meeting in London to discuss the topic further.
The aim from the delegations is to build supply chain resilience in the face of global disruption caused by the Covid-19 pandemic, which is triggering increases in production costs and inflation, which is at its highest in nearly 30 years in the UK. Last year, world leaders scrambled for ways to strengthen supply chains by improving transparency and diversifying sources of key products.
The UK now has the power to strike bilateral trade deals, which can ensure that the flow of critical goods is not affected after Brexit. Britain is keen to ensure that trade to and from South Korea continues, using chips for manufacturing as an example. The British automobile industry is among others that have been affected by the worldwide semiconductor shortage due to the pandemic.
Interested in reading more? Click here
Trucker protests in Canada threaten supply chains
Disruptive demonstrations are sparking concern amongst Canadian lawmakers as the busiest border crossing between the US and Canada became partially blocked by truck drivers who are protesting against Covid-19 restrictions. The Ambassador Bridge is regarded as “one of the most important border crossings in the world” by Public Safety Minister Marco Mendicino.
Since the crossing is responsible for 25% of all trade between the United States and Canada, Canadian ministers are worried about the implications of the truckers’ actions. Canadian Transport Minister Omar Alghabra said such blockades will have serious implications on the economy and supply chains. “I’ve already heard from automakers and food grocers. This is really a serious cause for concern.”
Goods are still able to flow across the border, but this means a journey of almost 70 miles north to the Blue Water Bridge, with this taking five hours longer than normal. Even this delay can cause production disruptions as factories are running so lean on parts supplies with an already fragile supply chain, said Jeff Schuster, president of the LMC Automotive consulting firm in Michigan. He notes that “everything is so ‘just-in-time’ these days.”
Click here to read more
The EU hopes billion-euro plan will help to fix chip shortages
The European Union has announced a €43bn ($48bn) plan to reduce its dependency on Asia as a main semiconductor producer amid global struggles with the chip shortage which is expected to continue through the duration of 2022. Ursula von der Leyen says chips are the “bedrock of our modern economies”, but the pandemic has exposed supply vulnerabilities.
The President of the European Commission said that “we have seen that whole production lines came to a standstill. While the demand was increasing, we could not deliver as needed because of the lack of chips.” She noted that if the “chips act” was approved by the EU parliament and the member states, it would connect research, design, testing and coordinate EU and national investment.
This move proposed by the EU is similar to US President Biden’s push to invest in a national chip-producing sector to ensure more of the key components are produced on its home turf. Per Hong, a supply chain specialist with the US consultancy Kearney, said that the problems could go on for months as Omicron remains: “We’re still in the early days of the disruption from Omicron running through every stage of the system.”
Read more here