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Supply chain chaos to persist through to next summer, Siemens chairman says

Supply chain chaos will likely persist through to the middle of next year, according to Jim Snabe, chairman of German conglomerate Siemens and Danish shipping firm Maersk.

Businesses and consumers around the world are currently facing lengthy delays on products and materials because of supply chain issues.

Speaking to CNBC’s Annette Weisbach on Tuesday, Snabe said: “Right now, we have congestion primarily in the West Coast of the U.S. where the ports are full of containers.”

While many countries have been closed to travelers at various times during the coronavirus pandemic, supply chains and transportation routes have remained largely open.

“The trade of goods has actually gone up, not down,” he explained. “There was a short period when the factories closed when the volumes went down but since the middle of 2020, the demand for physical products has gone up dramatically.”

The pandemic has resulted in more people working remotely and investing in their homes.

“The trade of goods has actually gone up, not down,” Snabe said, adding that he believes this is because people don’t spend as much on services anymore. “We don’t go to restaurants so much, we don’t go to the cinema, we don’t travel. People are home and they want to improve their homes.”

One of the main issues, Snabe said, is there aren’t enough truck drivers to pick up containers from the ports.

At the end of last week, Maersk had 84 vessels wait for an average of 18 days in front of ports, Snabe said. “That takes capacity out of the shipping industry because they are lying there idle,” he said.

“You have higher demand and lower capacity, not because we don’t have enough vessels, but because they are not sailing because of congestion,” Snabe added. “We have to balance that out. We think this will happen somewhere mid-next year, but maybe not before.”

Important items used in areas like healthcare can often be fast-tracked when necessary, Snabe said.

Semiconductors have been in particularly short supply during the pandemic, leading some car companies to pull semiconductor-reliant features from their vehicles and lengthy delays on products such as Sony’s PS5.

“We can make sure that that we can deliver,” Snabe said, adding that Siemens has a “preferred relationship” with its semiconductor suppliers.
Source: CNBC

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