The foreign trade container terminal at the Qingdao Port is used by cargo ships to load and unload containers.
Since the start of the year, ports and companies have been fighting the global supply chain crisis. The new omicron Covid variant may be another blow to the industry, as it appeared like the crisis was beginning to stabilizing.
Per Hong, senior partner at consulting firm Kearney, said that Omicron is a test of resilience for supply chains.
Sian Fenner, lead Asia economist at Oxford Economics, said in a note on Wednesday that the crisis is not yet over.
Omicron is setting up to be another test of resilience for global supply chains that were already under stress and in the midst of a lengthy healing process.
A South African scientist flagged the emergence of the strain and the world became aware of it late last week. The World Health Organization labeled it a "variant of concern" and said it could potentially become a "very high" global risk.
The strain has been found in the U.K., France, Israel, Belgium, the Netherlands, Germany, Italy, Australia, Canada and Hong Kong.
Hong said he is watching the Chinese government's response to cases in Hong Kong, which have not been reported in mainland China.
He wrote that China is expected to double down on its "zero-COVID" policy that has included mass lockdowns of entire cities and strict checks at ports to prevent cases from coming in.
The emergence of omicron could cause China to intensify its zero- Covid measures.
Hong pointed out that the disruptions caused by the Covid pandemic have shown that there are significant knock-on effects both up and downstream into other areas.
He said that if this does happen, shipping will be constrained, but we are certain to see more shortages of key manufacturing components and extended order backlogs for core electronic, automotive and consumer products.
China is home to some of the world's busiest ports. Seven of the top 10 busiest ports are in China. Hong Kong is the eighth most busy port last year.
The WHO said that it is not certain whether the omicron variant causes more severe disease than other strains.
Hong said that Omicron was setting up to be another test of resilience for global supply chains that were already under stress and in the midst of a lengthy healing process.
Most governments in the region are likely to resist re-imposing severe restrictions, but the bottom line is that supply chains will remain under pressure.
Fenner of Oxford Economics said that there were still some bumps along the way like reinstating of some restrictions to stabilizing recent Covid waves, but that workers were able to return and factories came online again in September.
Logistical challenges remain even as more production comes online. There are constraints on shipping supply in the short run due to a lag between new orders and deliveries.
Less than half of the ships arrived on time in 2021, and delays for late ships add more than a week to delivery times, according to Oxford Economics.
The third Covid wave is expected to cause Vietnam to regain its exports share. Many American firms with manufacturing facilities in Southeast Asian countries were affected by the Pandemic.
If omicron throws a wrench in the works on supply chain recovery, it could pose a threat to regional exports recovery.
Supply chains will remain under pressure even though most governments in the region are likely to resist re-imposing severe restrictions.
If omicron hits supply chains, the impact on Asia's gross domestic product is likely to be a fall of 1.6 percentage points for next year.
