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HomeSourcingProvide Chain Weekly Wrap-Up 07/01/2022-07/07/2022

Provide Chain Weekly Wrap-Up 07/01/2022-07/07/2022

Tesla vehicle deliveries plummet after disruption in China

Due to the lockdowns in China which caused one of Tesla’s key factories to shut down, the company’s delivery figures have declined quarter-over-quarter for the first time in over two years. Supply chain disruptions and other challenges associated with opening two new factories are also being blamed by the company for the lack of deliveries.

The EV maker delivered over 254,000 vehicles in the past three months, down from over 310,000 in the previous quarter. The company’s largest factory in Shanghai was forced to shut down temporarily due to Covid-19 restrictions, which severely impacted production. Setting up new factories in Germany and Texas has also caused Elon Musk a headache. Last month, Tesla reported that it was “overstaffed in many areas”, causing further concern which meant hundreds of employees were let go.

According to AlixPartners LLP, supply chain disruptions and their effects have caused many vehicle makers to operate less efficiently. Despite this, Tesla is set to increase its U.S. sales in the coming months, and June 2022 “was the highest vehicle-production month in Tesla’s history” according to the firm. Customer demand remains strong, but concerns about the global economy and the ripple effects of supply chain strains remain.

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Wheat supplies remain tight despite price drop

Although improved weather conditions and reduced demand have contributed to reduced wheat prices, experts remain concerned and believe supply will remain tight. The decline comes after figures reached a decade high because of the Russian invasion of Ukraine. It has been reported that U.S. wheat futures have fell to the lowest point since February and the EU wheat futures have decreased by 20% since mid-May.

One reason for the improvement is the recent weather conditions in the Northern Hemisphere, where the weather has normalized. As well as this, Australia is expected to produce a bumper crop. Demand has also reduced, as in a normal year, about 20% of wheat is fed to animals however this has reduced, reducing demand. The final reason is that the U.S. Federal Reserve’s choice to raise interest rates has caused money to flow out of commodities.

Despite this, it is uncertain whether this trend will continue. Kenneth Scott Zuckerberg, lead economist, grain and farm supply, with CoBank has seen “demand signals” in the past few days, with Egypt looking to increase supplies, along with Taiwan, Jordan and Bangladesh and more. He also believes that the global shortages of wheat will continue for approximately two more crop seasons. He said that “when prices go up, and a recession is looming, I think consumers are going to vote with their pocketbook.”

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Major export delays at European ports causing issues across the world

A range of goods, including furniture, car parts and vehicles are currently delayed at European ports. The situation is particularly bad in Germany and the Netherlands due to labor strikes and slowdowns. The export containers, which are headed for the United States are now backed up, and experts predict this will take months to clear out.

Problems with the arrival of vessels, container processing and the availability of containers are also contributing to the disruption. The auto sector will likely be hit hard by these issues, as key components such as lithium batteries are being held up. Andreas Braun, from Crane Worldwide Logistics has said that U.S. importers need to look weeks in advance for available vessels and containers to avoid problems.

The port strikes, largely due to failed labor contract talks, have increased pressure on global supply chains. As well as this, the lack of containers is a growing problem as rates are now increasing, which can be passed over to the consumer and cause inflation. Braun said that “yes, the strikes have had a big impact, but the congestion has piled up so much that even if there were no more strikes, the situation would remain chaotic for the next three months.”

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BtoB Central Staff
BtoB Central Staff
Btobcentral is dedicated to business news.


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