Published 20 Oct 2021
The Crises Never End: Corona Crisis, Container Crisis, Driver Shortage, Fuel Shortage… Now The Energy Crisis In China!
We share every part of our planet with other living things. Among them are bacteria, microbes and viruses at the microscopic level that produce what we eat and are useful to us, but also those that can bring about our end.
Our immune system and the possibilities of today's medicine are often enough to protect us, but these micro-organisms have lived on earth much longer than we have, and they seem to be more resistant and stable than we are to continue their family tree. Of course, the human will to survive cannot be underestimated. Despite great losses, humanity has managed to survive the most horrific epidemics and continue their species.
History Repeats Itself
History repeats itself, it is often said. "History does not repeat itself, but it rhymes," Mark Twain once said. The COVID-19 pandemic, triggered by the novel coronavirus SARS-CoV-2, has shown the whole world how quickly habits and social structures can change, giving humanity a new perspective on its vulnerability and globalisation. It is also visible that certain reactions to the novel coronavirus are repeated as a result of handed-down experiences from dealing with past epidemics, such as the Spanish flu or even the plague.
Since the end of 2019, the world has been fighting the coronavirus epidemic and its consequences. Just like the great epidemics in history that struck the whole world and caused the death of millions of people, the coronavirus, which appeared in China and infected more than 100 million people worldwide, has caused the death of almost 5 million people today. Those who survive face growing challenges and crises...
First Started The Container Crisis
Tight restrictions on economic activity to prevent the spread of the epidemic led to a massive drop in retail sales, while world trade initially came to an abrupt halt. Later, as restrictions were eased, countries reopened and China recovered early from the epidemic and increased its production, a strong economic recovery was observed.
But until this recovery, the difference in the balance between supply and demand in world trade brought logistical problems in maritime transport, where about 90 per cent of world trade takes place. The first crisis to be felt was the "empty container" crisis, as ships waited in port for weeks because of the epidemic. Ships arriving at the ports could not return in a short time because they could not unload their cargo, which exacerbated the supply problem.
While the problem of finding containers at sea continues to grow in global markets, particularly in the US and Europe, the problem has intensified with the emergence of new variants of the epidemic.
Shortage Of Truck Drivers And Port Closures Exacerbate The Situation
From toys to cars, countless industries rely on shipping containers to travel steadily and continuously around the globe. But while shortages of staff, such as truck drivers, continue to be a problem for container transport in Europe, particularly in the UK, epidemic port closures are also leading to increased traffic congestion. In the USA and China in particular, hundreds of container ships are still queuing to reach the ports, just as they were in the early stages of the epidemic.
Delays in unloading containers at ports and on land affect the travel time of ships. A few days of waiting in a port can add 2 weeks to the total voyage time of a container ship.
In addition, workers in the ports and warehouses can no longer work at full capacity as in normal times. It used to take 4-7 days for a container to be landed from a ship, unloaded and returned to port. Now it takes 3-6 weeks.
Although two years have passed, no solution has yet been found to the "container bottleneck" and the increase in freight costs in the Far East, America and Europe.
Freights Are More Expensive Than Goods Transported
The crisis has also led to a historic increase in freight costs. Container freight between Europe and Asia increased by more than 1000 per cent last year. This situation in global maritime trade has dealt a heavy blow to producers, exporters and importers who need intermediate goods.
Freight costs for 40' containers, which were $1600 a year ago, rose to $18000 due to increases in freight rates and extended shipping times. In some cases, the transport costs are even more expensive than the goods transported.
Large Companies Buy Their Own Containers
To avoid a product shortage, some large companies have recently even decided to buy their own containers or charter ships themselves. These include US giants Walmart and Home Depot, as well as Swedish furniture brand IKEA.
China's Energy Crisis Will Impact Global Trade
In addition to the current Covid-19 crises that have rocked world trade for the past two years, there is now an energy crisis. There have been problems with the power supply in China for days. Numerous reports of power shortages at industrial plants in several provinces have been reported. Factories have had to stop work. There have also been power cuts in private households. Numerous energy suppliers have cut back their production to avoid bankruptcy: The more they produce, the higher their losses. And so a fatal cycle results: Demand increases, supply decreases.
Several factors have been cited as the cause of the electricity shortage. In order to achieve its climate goals, China has ordered strict reductions in emissions. Local governments have therefore begun to ration electricity. In addition, there are high prices for coal and an unusually large demand for energy from industry, which has to process orders from all over the world due to catch-up effects after the Corona crisis, they said.
Analysts warn that China's economic growth could suffer a significant damper because of this energy crisis. Consequences will be felt worldwide.
Many Coal Mines In China Are Closed
China is the world's largest producer and consumer of coal. Natural gas accounts for 7.1 per cent of electricity generation, hydropower for 17.9 per cent, nuclear power for 4.8 per cent and wind power, solar energy and other renewable energy sources for the remaining 10 per cent. The problems in China's energy sector, which gets 60.8 per cent of its electricity generation from coal, play an important role, especially the inadequate coal supply and record-high prices.
At the root of China's problems is solid industrial production. Especially much electricity is needed for the production of aluminium, iron and steel. While the post-epidemic recovery has also increased demand from heavy industry in China, these sectors mainly consume electricity from coal. The closure of many coal mines in the country exacerbated the current supply shortage. Therefore, power outages due to insufficient coal supply may also affect production in these sectors.
Growing Concern Before Christmas
In our article regarding the truck driver shortage in the UK, we reported that UK authorities were concerned about the possibility of a Christmas without toys and presents this year and were trying to take measures to prevent this. However, the concern is no longer limited to the UK.
Moreover, the only problem is no longer the shortage of drivers in some countries, as it is predicted that the energy crisis in China could lead to problems in the supply of electronic products, especially in Western countries, before Christmas and will directly affect developed economies in addition to China.
We hope that these crises will be resolved as soon as possible and that Christmas will not be overshadowed. Because none of us ever wants to see the disappointment on the children's faces, do we? ☹