The severely damaged international shipping sector may worsen before recovering from COVID-19 pandemic shock, a report observed.
It had become intensely challenging for commodities to be delivered since the lethal virus struck the world. As shipping became more challenging, so did product prices. And consumption consequently got slower.
A Moody’s Analytics report released on Monday, Oct. 11, expected the crisis might persist a little longer even if countries started to rally from the pandemic.
“As the global economic recovery continues to gather steam, what is increasingly apparent is how it will be stymied by supply-chain disruptions that are now showing up at every corner,” it wrote, as reported by 9News.
While the lethal virus has not left, economic pressure left nations no other choice but to resume the new normal.
“This presents a serious challenge to harmonising the rules and regulations by which transport workers move in and out of ports and hubs around the world,” analysts wrote.
“Border controls and mobility restrictions, unavailability of a global vaccine pass, and pent-up demand from being stuck at home have combined for a perfect storm.
“Global production will be hampered because deliveries are not made in time, costs and prices will rise and GDP growth worldwide will not be as robust as a result,” it reads.
Truck drivers are critical in having commodities supplied, but the study argued the inconsistent restrictions from different countries would hamper the process.
Already, truck driver scarcity resulted in port congestion and prompted petrol stations in the U.K. to run out.
The Moody report was pessimistic that the shipping sector could recover when countries have not cooperated to assure the seamless operation of the global logistics and transportation network.
Hence, the study warned the world may suffer worse supply chain disruptions “before they get better.”
According to 9News, industry insiders share the same worries, anticipating the crisis would linger at least until 2023.
Yet, some were also positive the situation might lighten up quickly.
“This will not be an issue next year at all,” said JPMorgan Chase CEO Jamie Dimon at an Institute of International Finance conference, as quoted by the outlet.
“This is the worst part of it. I think great market systems will adjust for it like companies have,” Dimon added.