next test for global supply chain crisis

Ports and companies have been battling the global supply chain crisis since the start of the year. Just as it appeared like the crisis was beginning to stabilize, the industry may now face yet another blow: the new omicron Covid variant.

Omicron is “another test of resilience” for already-stressed supply chains, said Per Hong, senior partner at consulting firm Kearney.

“Supply chains remain vulnerable to pandemic-related disruptions, with the Omicron variant highlighting that the crisis is not yet over,” said Sian Fenner, lead Asia economist at Oxford Economics, in a note on Wednesday.

The world first became aware of the new omicron variant late last week, after a South African scientist flagged the emergence of the strain. The World Health Organization swiftly labeled it a “variant of concern,” adding that it’s likely to spread further and could potentially become a “very high” global risk.

Since then, the strain has been found among cases in the U.K., France, Israel, Belgium, the Netherlands, Germany, Italy, Australia, Canada and Hong Kong.

While there have been no reported cases of omicron in mainland China, Hong said he’s closely watching the Chinese government’s response due to cases surfacing in Hong Kong.

“China is expected to double down on its ‘zero-COVID’ policy that in the past has included mass lockdowns of entire cities, enforced quarantines, as well strict checks at ports, including monitoring ships and cargo, to prevent cases from coming in,” he wrote.

Other analysts have also warned that China could intensify its zero-Covid measures with the emergence of omicron.

As disruptions caused by the Covid pandemic early on have shown, lockdown measures in one country have “significant knock-on effects both up and downstream into other areas,” Hong pointed out.

“If this does happen, not only will shipping be constrained, but we are certain to see yet more shortages of key manufacturing components and extended order backlogs for core electronic, automotive and consumer products depending on regions impacted,” he said.

Some of the world’s busiest ports are in China. Of the top 10 busiest ports, seven are in China, according to data from the World Shipping Council. Shanghai ranks first, Ningbo-Zhoushan ranks third, and Shenzhen in fourth place, while Hong Kong is the eighth most busy port last year.

To be sure, the WHO has said it remains unclear whether the omicron variant causes more severe disease than other strains, such as delta.

“A lot of unknowns, but Omicron [is] certainly setting up to…