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What Is The Supply Chain Crisis And How Can Latam Profit From It?

The world is currently going through, prior to Christmas, the risk of a supply chain crisis with billionaire implications.

Showcase of a supermarket

If you've been wanting to make year-end purchases lately and find that several products have high prices, it may be that what you want is being affected by the crisis in the supply chains. Photo: Unsplash - Reference Image

LatinAmerican Post | Santiago Gómez Hernández

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Leer en español: ¿Qué es la crisis de la cadena de suministros y cómo Latam puede sacar provecho?

If you've been wanting to do your year-end purchases lately and find that several products have high prices, it may be that what you want is being affected by the crisis in the supply chains. This, mainly, would have to be related to the importation of products or supplies for the manufacture of them.

What is the supply chain crisis and why does it affect Latin America?

It seems that for 2 years now, the word that sums up the world reality is "crisis". Today the world is going through health crises, environmental crises, political crises, economic crises, etc. Well, it seems that a new one will have to be added, the crisis in the supply chain.

Although it seems like a new challenge, the reality is that this had been anticipated for some months, but given the over-demand that the end of the year means, the problem worsened. Now this new eventuality, which is precisely one of the consequences that COVID-19 continues to cause, new alternatives will have to emerge. After the quarantines and confinement measures, several seaports and industries were dammed. At the time of reactivating the economy, demand increased dramatically, leaving production hanging, port congestion, and a shortage of containers that are the main causes of shortages, shortages, prices increases, and inflation.

The crisis poses an additional challenge at the time of reactivation of economies, especially those that are developing since they have been the hardest hit in these two years.

Opportunity for the region

This difficulty in obtaining supplies and elements for the production of various goods and services will also be an opportunity for the entire region to assume the important role of centralizing productivity.

This means that it will be time to look for nearby suppliers that can be a constant alternative at the time of distribution. In Asia, merchandise and product backlogs are less than in the middle of the year and were not enough to guarantee the production of all industries. Even Latin America may once again consider being an important headquarters for manufacturing and producing more products for the entire hemisphere and even for Europe. The distances are shorter and in the event of possible problems brought by the new variants of the coronavirus, it is Latin America that can guarantee fewer delays compared to Asia.

Also read: Could the New Variant Of The Coronavirus Affect The Latin American Economy?

The distance, for example, between Veracruz and Rotterdam (Europe's main port) is barely greater (9,034 km) than that of Shanghai and the Dutch city (8,921 km), but the journey by boat is much greater. There are at least 28 days between the Chinese and the European ports, which also means a higher carbon footprint, much higher than the time between Santos (the main port in Brazil) and the same city in Europe, according to searates.com (18 days, approximately).

A relief for consumerism

Despite the risks that a crisis like this may have in full reopening and economic reactivation, it will also be necessary to highlight the benefit for consumption and the opportunity that presents itself to change habits.

We have the options to look for traditions and habits that are less harmful to the environment. Christmas is a time of hyperconsumption in the western world and this always represents a blow to the environment due to pollution.

It is time to take advantage of and reduce mass consumption. Reducing does not mean eliminating, it is understandable that spending on Christmas represents salvation for millions of companies throughout Latin America, but it is necessary to be aware of the gifts that we acquire for this date. Additionally, it will always be much more beneficial to buy locally. Instead of buying an imported item or food that will be much more expensive and with a higher carbon footprint, we can buy from farmers and local producers who work with suppliers from the country or the region.