The White House announces a supply chain ‘action plan’ to clear the extreme backlog
President Biden has announced a new plan in an attempt to tackle the supply chain congestion that the United States is facing. The White House is aiming to expand the capacity of ports and inland waterways to ease the current backlog which is slowing the deliveries of goods and rising prices. The administration has announced plans to provide millions of dollars in an attempt to rescue the sinking supply chain.
The funding includes $17 billion as well as $243 million being awarded in new port and marine infrastructure grants by the administration. Under a new initiative, port officials across the country can redirect money from previous federal grants to new projects to clear bottlenecks. The Port of Savannah plan to make the most of the new scheme as it is set to use $8 million to establish five inland lots to reduce the number of containers clogging the docks.
Wholesale prices across America saw their sharpest increase in 11 years, with snarled supply lines accounting for 60% of this increase, according to Mahir Rasheed of Oxford Economics. He said that “the persistent mismatch between supply and demand will remain a principal driver of elevated inflation as capital and labor shortages improve only gradually heading into 2022.”
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Adidas deals with huge sales hit amid supply chain issues
This week, German sportswear giant Adidas has announced a $1.2 billion hit to its sales due to a lack of production and supply chain bottlenecks building up over time. The company expect the problems to continue into the new year as it will continue to attempt to rebound from the effects of the pandemic, like many companies.
Factory closures over the past few months in Vietnam meant that Adidas had lost capacity for 100 million items in the second half of 2021 according to Finance Chief Harm Ohlmeyer. Along with these disruptions, delays in the world of shipping, especially in Asia, have damaged the company’s figures even further.
The lost capacity will affect the company financially into 2022 even after mitigation actions, with the sourcing network set to be mostly back to normal by the end of the year, according to Adidas. The company has revealed its action plan to try and recover its success in China, its most important market for growth. It has set up a dedicated studio to generate faster marketing and is increasing its creation of products purely for the Chinese market.
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Striking truckers in Asia pose additional threats to the supply chain
Workers in the trucking industry in Asia are striking against rising diesel prices in emerging economies, adding to the pressure that global supply chains are already dealing with. The disruptions are set to worsen delivery times of finished goods and raw materials, along with affecting shipping congestions across the world.
Currently, a protest is happening in Bangladesh, where trucking staff are refusing to work until the government reverses its decision to raise diesel prices by over 20%, according to the country’s Truck, Covered Van and Lorry Owners and Workers’ Coordinating Council. Truckers in Indonesia’s South Kalimantan have stopped work to express concerns about diesel shortages, and in Thailand, drivers have been on strike demanding a cap on diesel prices.
The pressure on prices in the continent has already risen by 64% this year and in October, they spiked to the highest since 2018, according to Bloomberg Fair Value data. “Countries like Indonesia and Bangladesh that typically import diesel are reeling from the financial costs of subsidizing the fuel while import costs have been rising,” said David Wech, Chief Economist at energy shipping-analysis firm Vortexa.
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