Problems in Vietnam and Malaysia indicate new Covid-driven logistics crisis


Although parts of the logistics markets of the western world are clearly experiencing some form of shaky recovery, with airline services expanding at a moderate rate, the new threat is that parts of Asia will now be plunged into crisis, crippling both supply chains and logistics operations.

The latest problems are emerging in South East Asia, with both Malaysia and Vietnam experiencing intense disruptions due to anti-Covid measures.

It is being reported that Malaysia is suffering a substantial outbreak of disease and although ports and airports are operating moderately well, much of the rest of the economy is being affected. In particular press reports have drawn attention to the semiconductor industry which is experiencing disruptions in production due to quarantining workers. This seems to be heightening the existing problems in the semiconductor supply chain.

Vietnam is also seeing an accelerating crisis with intense outbreaks leading to much of the country to enter various extremes of quarantine behaviour leading to severe problems around port and airport operations. Ho Chi Minh City, which is an important sea hub as well as a manufacturing centre, seems to be in a state of near-martial law with a curfew being imposed by troops patrolling the streets. The impact on both freight transport and supply chains is likely to be substantial. The wave of goods imported from Vietnam since the middle of 2020 has been an important component in the congestion seen in the US, especially on the west coast ports, due to American consumers buying Vietnamese manufactured products, such as furniture, in remarkable quantities. If this flow of goods is now to experience further disruption then it would be logical to assume that congestion and dysfunction in areas such as container movements will get worse.

The danger is that COVID-19 will spread across the whole region and possibly spread to economies in North Asia such as Japan and South Korea. This may represent a further leg in the crisis with the consequence that dysfunction in international logistics markets may increase. With shippers already facing large increases in prices for both sea and air freight, the situation moving into the Christmas peak season may become very serious.

Source: Transport Intelligence, 31 August 2021

Author: Thomas Cullen

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