Global economic restart hits bottleneck reality as supply chain blockages continue

, Global economic restart hits bottleneck reality as supply chain blockages continue, The Evepost National News

Finance ministers discussed the issue at G7, G20, IMF meetings worldwide, Deputy Prime Minister Chrystia Freeland says

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Canadians should be “realistic” about the post-COVID restart of the global economy and resulting supply chain bottlenecks, Finance Minister Chrystia Freeland said Thursday.

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The global supply chain crisis has been affecting availability of goods in stores and driving up prices, a situation that stands to continue through to the holiday season.

Bottlenecks have led to congestion at ports around the world, as demand has increased while countries recover from the pandemic. On Wednesday, U.S. President Joe Biden announced the Port of Los Angeles will move to 24-hour operations to try to ease the situation in the United States.

The Canadian government is “monitoring the supply chain and Canadian ports, very, very closely,” Freeland told reporters at a press conference in Washington. “We are definitely mindful of the supply chain issues in the Canadian economy,” she said.

Freeland was in Washington for the annual meetings of the World Bank and the International Monetary Fund, as well as meetings with her G7 and G20 counterparts.

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“The issue of both supply chain congestion and supply chain shortages was discussed at the G7 meeting, at the G20 meeting, at the broader IMF meeting,” Freeland said, adding she also discussed it with U.S. Treasury Secretary Janet Yellen, and the deputy prime minister of South Korea, a country Freeland said has an important role in the global supply chain.

“It’s definitely a concern on the minds of finance ministers around the world,” she said.

, Global economic restart hits bottleneck reality as supply chain blockages continue, The Evepost National News
Finance Minister Chrystia Freeland walks with German Finance Minister Olaf Scholz outside the International Monetary Fund Headquarters in Washington, D.C., on Oct. 13, 2021, during the IMF/World Bank annual meetings. Photo by Jim WATSON / AFP) (Photo by JIM WATSON/AFP via Getty Images

Asked whether Canadians should be worried about the availability of goods ahead of the holiday season, Freeland responded that Canadians should be confident in the robustness of the Canadian economic recovery.

“Now, what we have seen in Canada and around the world, is that shutting down an economy, as we had to do to fight COVID, is a simpler process than turning an economy back on. Turning an economy back on, in Canada and also around the world, is inevitably uneven,” Freeland said.

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“And that natural unevenness is compounded by the fourth wave of the coronavirus. So, you know, we need to be realistic about that, mindful of that.”

Goldy Hyder, president and CEO of the Business Council of Canada, said in an emailed statement that it’s “imperative that governments and the private sector work together keep our supply chains moving.”

Since more than 65 per cent of Canada’s GDP is tied to trade, the “fluid flow of global supply chains impacts both economic activity within Canada and the living standards of all Canadians,” Hyder said.

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David Johnston, director of the George Weston Ltd. Centre for Sustainable Supply Chains and the master of the supply chain management program at York University’s Schulich School of Business, said the government should be watching the issue.

, Global economic restart hits bottleneck reality as supply chain blockages continue, The Evepost National News

“When people are not consuming, that affects the gross domestic product of a country, it affects people’s employment, and of course, it affects whether your kid’s going to get what they want for Christmas,” he said.

Johnston said the supply chain problem is due to surging demand for some items, which comes to a pinch point at places like the L.A. port where the product can’t be unloaded because there aren’t enough workers or there aren’t enough trucks with drivers for transportation from the port.

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He said due to COVID-19, there was “a very extreme period of no demand in some commodities,” which then saw a big surge.

“Of course, it’s very difficult to bring factories and ships and find new trucks and more warehouse space on short notice,” Johnston explained. “We’re kind of out of balance between supply and demand globally right now. Containers are where they’re not supposed to be. We’ve maybe got too much of some products, but too little of others. And we have these pinch points.”

Johnston said Canadian ports look to be at full capacity and the situation doesn’t appear to be as bad here as in the U.S.

He noted that the situation is affecting products that are not only made overseas but those that are made in North America but require parts to be sent from other parts of the world.

“You might have an appliance that’s made in Mexico, but it has parts that might be coming across the ocean from China or Vietnam,” he said. “It’s a bit of a patchwork.”

Partial shipments are still coming through, despite the bottlenecks. “There is still product coming out,” though “maybe not as much as some retailers have ordered,” Johnston said.

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