QUESTIONS have been raised on how the omicron variant will impact the already stressed container shipping supply chains, reports IHS Media.
To get to the bottom of the question it is necessary to break this into four separate components: The impact of the variant from a medical perspective, the political perspective, the impact on operational elements, and the impact on demand.
As for the medical perspective, it is too early to state anything conclusive. The health authorities are currently investigating it, but precious little solid information is available. What appears to be the case for now is that it spreads more easily than the current Delta variant. And the lack of additional knowledge leads to the second critical element: political responses.
Ever since the pandemic outbreak in 2020, countries across the world have taken very different political choices when it comes to COVID-19 responses. The emergence of the Omicron variant essentially exposes the same pattern. Some countries have used this to postpone otherwise announced re-openings, quite a few reacted with instant flight and immigration bans, and then some have reacted by not changing their current policies at all.
In essence, the political choices reflect the unknown nature of the Omicron variant: Impose restrictions fast and risk being seen as overly scared and having further wrecked the economy if it turns out the variant is not more dangerous than the current strain. Or you can wait until you have more information, but if it then turns out the variant is indeed more dangerous, then it will be too late to do anything. It is the proverbial 'damned if you do, damned if you don't.' This is further complicated by the highly politicised debates gathering momentum concerning vaccination strategies.
This also means that the impact of the Omicron variant on the operational aspects of the container shipping sector is to be found in the political responses. At best, the governments do not change their approach compared with pre-Omicron. In this case the existing risks remain: Namely that restrictive countries might shut down sectors in the case of outbreaks.
The largest risk has for months been in China where even just a few cases typically lead to a shutdown. This is what caused the shutdowns in Yantian and Ningbo earlier in 2021. If Omicron is indeed more virulent this further increases the risk of such port shutdowns. It could also lead to other infrastructure elements being negatively impacted in countries taking a restrictive approach such as the ability of trucks to move across countries and borders.
Hence operationally, the risk to the supply chains is conceptually the same but if Omicron is more virulent then the likelihood of further disruptions is now higher across a large range of countries vital to the global supply chain.
Finally there is the impact on demand. Especially in the US, the impact of the pandemic has been a significant shift in spending away from services and over to goods. This is one of the key drivers underlying the demand boom - a boom which in itself is one of the components causing bottlenecks in the supply chain. If Omicron leads to a new wave of the pandemic sweeping the world, this will likely cause consumer behaviour to remain in what can best be described as a 'pandemic spending pattern.'
And finally, it should be noted that Covid constantly mutates. Omicron is just one of thousands of mutations already discovered. Therefore, the likelihood is that we will see the emergence of even more variants going forward. As such, the impact of those will again depend on the political response as well as the behavioural response of the consumers.
SeaNews Turkey
To get to the bottom of the question it is necessary to break this into four separate components: The impact of the variant from a medical perspective, the political perspective, the impact on operational elements, and the impact on demand.
As for the medical perspective, it is too early to state anything conclusive. The health authorities are currently investigating it, but precious little solid information is available. What appears to be the case for now is that it spreads more easily than the current Delta variant. And the lack of additional knowledge leads to the second critical element: political responses.
Ever since the pandemic outbreak in 2020, countries across the world have taken very different political choices when it comes to COVID-19 responses. The emergence of the Omicron variant essentially exposes the same pattern. Some countries have used this to postpone otherwise announced re-openings, quite a few reacted with instant flight and immigration bans, and then some have reacted by not changing their current policies at all.
In essence, the political choices reflect the unknown nature of the Omicron variant: Impose restrictions fast and risk being seen as overly scared and having further wrecked the economy if it turns out the variant is not more dangerous than the current strain. Or you can wait until you have more information, but if it then turns out the variant is indeed more dangerous, then it will be too late to do anything. It is the proverbial 'damned if you do, damned if you don't.' This is further complicated by the highly politicised debates gathering momentum concerning vaccination strategies.
This also means that the impact of the Omicron variant on the operational aspects of the container shipping sector is to be found in the political responses. At best, the governments do not change their approach compared with pre-Omicron. In this case the existing risks remain: Namely that restrictive countries might shut down sectors in the case of outbreaks.
The largest risk has for months been in China where even just a few cases typically lead to a shutdown. This is what caused the shutdowns in Yantian and Ningbo earlier in 2021. If Omicron is indeed more virulent this further increases the risk of such port shutdowns. It could also lead to other infrastructure elements being negatively impacted in countries taking a restrictive approach such as the ability of trucks to move across countries and borders.
Hence operationally, the risk to the supply chains is conceptually the same but if Omicron is more virulent then the likelihood of further disruptions is now higher across a large range of countries vital to the global supply chain.
Finally there is the impact on demand. Especially in the US, the impact of the pandemic has been a significant shift in spending away from services and over to goods. This is one of the key drivers underlying the demand boom - a boom which in itself is one of the components causing bottlenecks in the supply chain. If Omicron leads to a new wave of the pandemic sweeping the world, this will likely cause consumer behaviour to remain in what can best be described as a 'pandemic spending pattern.'
And finally, it should be noted that Covid constantly mutates. Omicron is just one of thousands of mutations already discovered. Therefore, the likelihood is that we will see the emergence of even more variants going forward. As such, the impact of those will again depend on the political response as well as the behavioural response of the consumers.
SeaNews Turkey