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"Fears Of Rising Food Prices, Freight Rate Spike &
Extensive Shortages Trigger Panic On Supply Chains"
by Epic Economist
"Brace for more shortages, shipping disruptions, and painful price hikes as global tensions continue to escalate and wreak havoc on supply chains. This week’s events have sparked unforeseen chaos on global trade and already led to major interruptions in the flow of goods across the world. As the conflict continues to accelerate, industry experts are warning for catastrophic damages in the shipping industry, as well as soaring oil prices and a worldwide shortage of commodities and raw materials
In the past few days, several international companies already started a mass shutdown of factories, adding further strains to fragile global supply chains. The situation is threatening to cause extended delivery delays and exacerbate shortages all around the globe. The impact of the crisis on transportation is going to trigger shockwaves in every link of the global supply chain, but it won’t be the only ominous ramification. From grains to barley, and copper to nickel, every sector of the global industry will suffer as the confrontation takes a turn for the worse.
Of course, it’s not just the European Union that will be hit - many nations around the world, including the U.S., rely on exports, and interruptions to the shipment of goods can affect food security in many regions. “Rising food prices would only be exacerbated with additional price shocks, especially if core agricultural areas are seized by loyalists,” warned Per Hong, senior partner at consulting firm Kearney.
Together, both countries account for almost 29 percent of the global wheat export market. The countries in conflict are also major supplies of metals and other commodities. Right now, one major concern for the U.S. industry is the rising price of crude oil and oil derivatives spurred by the worsening tensions. Oil prices soared to over $100 per barrel this week, and the effects of the rise are already apparent.
Shipping companies have announced another round of price hikes in the coming days and weeks. Last month alone, the price of maritime fuel used to power ships had surged by 23% due to ongoing upward pressure on global crude prices, Bloomberg reported.
Meanwhile, truckers are warning that they will become more selective” in the jobs they pick amid fuel price uncertainty. One truck company owner told The Loadstar: “The sustained high price of road fuel has already started to affect which jobs we will and won’t do. Crude prices have hit their highest in several years, and this is a pricing situation that cannot go on deteriorating. But it looks likely that this will only be getting worse with news of the Ukraine fiasco.”
On a consumer level, the Americans were definitely amongst the first in the world to feel the impacts of the price distortions caused by the crisis. Overnight gas prices have shot up. At the beginning of the week, national gas prices were averaging $3.56 per gallon, by the end of Thursday prices were already up by $0.10 per gallon, closing at $3.66.
The relentless rise in gas and energy prices is already making the cost of everything reach extraordinary levels, and inflationary pressures will remain a headache for consumers and businesses. The CEO of Allegion said he sees an "iceberg" of inflation that will soon start to move through the economy, and noted that what we experienced so far is nothing compared to the turbulence that’s coming. He highlighted that as fuel costs rise, labor market shortages will become more acute, and businesses will struggle to hire truckers to deliver their goods across the country.
“You’re going to really start to see an impact on people’s buying power and you just worry about the long-term business impact on how that might start to play out,” he added. With inflation, supply chain issues, and now the impact of sanctions, many Americans are concerned about what the future may hold.
It seems that this modern-day nightmare is far from over. The simultaneous emergence of global conflicts, health and hunger crises, natural disasters, and a financial meltdown will definitely change the world as we know it. Now more than ever, we should start watching global events very closely because things could change in a snap of fingers, sinking the entire world into unprecedented chaos."
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