Gaming Out How And When the Big Supply Crunch Of 2021 Ends



Enda Curran | Bloomberg

Economists at HSBC have gamed out three scenarios for how and when the Big Crunch of 2021 eventually comes to an end:

Shipping disruptions begin to ease after Lunar New Year in early February

The supply headaches subside during the second half of 2022

The challenges persist all next year

In the first case, the bank’s economists led by Shanella Rajanayagam say the traditional closure of China’s factories for the Lunar New Year holidays and the quieter period that follows the break may take pressure off sea freight and provide breathing room for logistics operators.

That sounds pretty optimistic given that some 80 ships are still trolling off the coast of Southern California. Earlier this year, it took six weeks after Lunar New Year for a bottleneck of 40 ships to be cut in half. (Click here for Bloomberg’s Big Take explainer Tuesday about all the knots tying up cargo around Los Angeles.)

HSBC’s second possibility is that the disruption lingers until the second half of the year due to still high shipping costs “or there are unforeseen closures — for example of factories and/or ports to contain the spread of the virus — all of which would make it challenging to clear backlogs of containers at congested ports.”

To read the full article in Bloomberg, please click here.