Omicron's threat to global supply chain


Chartchai Parasuk, Opinion, Bangkok Post (Thailand)

13 Jan 2022


By definition, a supply chain disruption is any event that causes a disruption in the production, sale, or distribution of products. Supply chain disruptions can include events such as natural disasters, regional conflicts, and pandemics.


If you think that supply chain disruption in 2021 was bad, a new round of disruption in 2022 could be at least three times worse. It could even be bad enough to cause a worldwide economic recession. That is because the Omicron variant outbreak is much worse than the Alpha-Delta variant outbreaks. In 2021, the highest daily Covid-19 infection tally was 905,642 cases on April 28. The daily Omicron-led outbreak on Jan 10 recorded 3,281,975 infected cases.


US analysts estimate that Omicron can transmit 2.7 times faster than Delta and the outbreak wave will peak in mid-February. According to the Thai Ministry of Public Health's projection, under the worst-case scenario, Thai Covid-19 cases would peak in March with 30,000 cases per day. A total number of infected cases is not projected.


The World Health Organization warned that, by the end of March, half of Europe could catch Omicron. I am not that pessimistic but I did notice that the Spanish flu of 1918 infected 25% of the world's population. Prior to the Omicron outbreak in late November 2021, about 3.5% of the world's population (about 280 million people) was infected with previous Covid-19 virus variants. If Omicron is as infectious as the Spanish flu, there will be at least 20% more of the world's population waiting to be infected. That is 1.6 billion more people. With "only" 280 million people being quarantined in 2021, world supply was in bad shape. The waiting time for Chinese-manufactured products to reach American consumers increased from 41 days in 2020 to 76 days in 2021. Supply shortages caused product prices to soar resulting in the US inflation rate hitting 6.81% in November 2021. If Omicron should infect 1.6 billion workers and consumers, it's hard to imagine its impact on international supply flow.


The argument that Omicron produces much less severe symptoms and deaths, despite its highly transmissible nature, does not help ease supply chain disruption...


... To demonstrate the impact of supply chain disruption on prices, one does not need to look further than the recent steep rise in pork meat prices. The Swine Raisers Association of Thailand estimates that the recent swine epidemic has cut the pork supply by half and caused a sharp rise in pork meat prices -- a 30% price jump from last year...