Empty shelves and half-filled carts in groceries conjure memories of the earlier, panicked days of the pandemic. But these shortages reflect a larger problem: the containers transporting goods have been getting stuck in ports around the world, generating backlogs in a system touted to be fine-tuned to maximize efficiency.

The extraordinary circumstances people found themselves in as COVID-19 stormed the world spawned demands that outpaced already-dwindling supplies. The global supply chain, supposed to ensure the efficient flow of goods and services across borders, suffered disruption, causing shortages. The pandemic shed light on the long-standing malady of this network: overreliance on large economies renders those dependent on them vulnerable, especially in times of crisis.

Control of the Center 

While global trade has been historically structured to benefit rich countries, globalization today occurs on a scale unlike ever before. Innovations like the shipping container and computerized systems helped streamline trade, together with the reduction of tariffs and trade barriers. But the shock of the supply chain crisis, exacerbated by the US-China trade war, challenges the system. 

At the outset of the pandemic, countries across the world restricted movement of individuals and businesses. With most factories and establishments closed, millions of workers were laid off and people had less money to spend. However, demand for protective equipment such as surgical masks and gowns unexpectedly surged.

As the main manufacturers of these equipment even before COVID-19 hit, factories in China increased production and the number of cargo vessels delivering protective gear to satisfy the global demand. However, because borders began closing down, empty shipping containers amassed in numerous ports and were unable to return to China on time. 

Forced to work harder without ample pay, truck drivers and essential workers started quitting their jobs, reducing manpower to facilitate the supply chain. As people quarantined in their homes found convenience in online shopping, the lack of shipping containers in some ports and the influx of goods in others proved overwhelming to manage for a drained workforce. As orders swelled, the cost of shipping the containers soared and consumers felt the increases in the prices of products. 

Accompanied by the US-China trade war, where tariffs flung between the two countries, each protecting its own economy, upheavals in the global supply chain persist and reverberate. Worldwide overreliance on manufacturing in countries like China exposes the vulnerabilities of countries with smaller economies as the global economy worsens and economic recovery halts. 

Gambit of Wits 

The global supply chain is a game where key players deploy strategies to advance further. Later on, alliances and support become a common tactic. However, skillful players introduce overreliance as a strategy to compromise other players’ resources to win the game. 

Overreliance occurs when less-developed countries are pushed to center their economies on supplying raw materials for global powers to manufacture with. The more dependent a less-developed country becomes on foreign capital, the more power and control stronger and richer countries accumulate. 

Consequently, overreliance on larger economies triggers the susceptibility of the global supply chain to shortfalls. For example, as factories shut down and production outages ensued in China, dubbed “The World’s Factory,” global exports fell short and countries dependent on these exports suffered shortages. 

Since 2009, China has been the largest exporter of goods, with exports in 2019 amounting to $2.641 trillion. Even the G7 or the countries with advanced economies such as the United States and the United Kingdom, greatly depend on Chinese imports to increase their GDP percentage. The detrimental effects brought about by COVID-19 resulted in a 7.4- percent decline in the global merchandise trade in 2020. 

This spells even more disaster for countries like the Philippines whose economies globalization pries open to serve as mere suppliers of raw materials. The Just-in-Time (JIT) production model, which businesses have utilized since the 1970s, has allowed companies to produce the exact demanded amount of goods and services with minimum waste. This includes sourcing raw materials from locations where the costs of labor and materials are cheap.

Possibilities of COVID surges and factory shutdowns remain as new variants emerge. Single-source distribution instead of domestic production produces a domino effect that afflicts import-dependent countries’ economies. There is no resiliency in overreliance as seen in the state of manufacturers, suppliers, and producers that end up with scant outputs unable to meet the demand of consumers.

Checkmate 

It took a clogged supply chain for the world’s largest economies to be led to confront the network’s weak links. But in countries tangled in the lopsided relations comprising the chain, the problems have long been glaring, the solutions clear. In the Philippines, raw materials are exported to be processed abroad while imports flood markets, and the abundance of domestic resources stands in stark contrast to the absence of a robust industrial economy that could be vital for self-sufficiency.

The economic models the national government pursues align with features of globalization that deplete rather than benefit the country. In its economic and political briefing last February, thinktank IBON pointed out that while the Duterte government started in 2016 with its 10-point agenda promising development, it stuck to policies that stunted domestic growth. In fact, even before the pandemic and the disruption of the supply chain, manufacturing growth has already been contracting since 2017.

The supply chain crisis brings to light the need to shorten the supply chain and get its moving parts within local borders. This entails advancing and promoting local manufacturing and incorporating technical innovation to boost production. Moreover, investing to improve and empower these capabilities would pave steps for the country to be self-sufficient and less reliant on imports, therefore generating stable jobs and economic surplus. 

The pandemic uncovered afflictions that have been present even before the virus struck. Economies are reeling from the impact of COVID-19 on the global supply chain crisis. The supply chain may have long been a game played well enough by bigger players, but it is lost once supplies are at a checkmate due to overreliance on one foreign power. ●