As the 2021 holiday season revs into full swing, supply chain snarls continue to plague seasonal sales. If current supply chain troubles weren’t enough to deal with, the rapid spread of the Omicron variant of the coronavirus has everyone wondering whether living with Covid-19 is the new normal. Economics writer Brian Milner (@bmilnerglobe) poses a question that many others are also asking: “Is this a temporary crisis or something we’re going to have to live with long term?”[1] When humans suffer from lingering effects of Covid-19, they call it long-haul Covid. It’s looking more and more like the supply chain is going to suffer from long-haul Covid as well. Milner adds, “The pandemic is not the only culprit, as British Columbians who have recently dealt with supply disruptions stemming from catastrophic floods can attest. But the coronavirus has exposed serious cracks in once-well-oiled global supply pipelines that played a key role in the huge expansion of world trade over the past two decades. The question is: Should we think of this as a temporary crisis that will be resolved as the system returns to something approaching normal? Or are we going to have to learn to live with chronic shortages — and the higher prices that come with them — for a lot longer than any of us would have imagined?

The Omicron Virus

It only took days following the announcement out of South Africa that a new coronavirus had been detected for that variant pop-up around the globe. Healthcare industry journalist Susan Morse (@susanjmorse) reports, “The World Health Organization has declared the new COVID-19 variant Omicron a ‘Variant of Concern’.”[2] What’s worrisome, however, is not what we know about the variant, it’s what we don’t know. Morse explains, “There are many unknowns to Omicron, including how effective current vaccines will be against the new variant. … The variant has been detected at faster rates than previous surges of infection, suggesting that this variant may have a growth advantage, according to WHO.”

Correspondents from the Washington Post report, “Omicron’s genetic profile is unique from other circulating variants, meaning it represents a new lineage of the virus. It is distinct from other variants in another critical way: There’s a greater number of mutations. Tulio de Oliveira, director of the Center for Epidemic Response and Innovation in South Africa, said there are more than 30 mutations in the spike protein, the part of the virus that binds to human cells, allowing it to gain entry. Scientists are worried those mutations could make Omicron more transmissible and potentially equipped to defy immune defenses, making vaccines less effective.”[3]

Despite the fact that we don’t yet know how effective vaccines will be against the Omicron variant, world markets had a kneejerk reaction to the news of its spread. Journalists from the New York Times reported, “The world reacted with alarm to the highly mutated new coronavirus variant discovered in southern Africa, as the United States, the European Union and nations across the globe imposed new travel restrictions, financial markets swooned and visions of finally emerging from the pandemic started to dim.”[4] The editorial team at the Wall Street Journal adds, “Omicron’s mutations appear to make it more transmissible and may allow it to evade some of the vaccine immune response. But this has also been true of other variants. The virus will continue to mutate as it spreads, and immuno-compromised individuals with chronic infections are petri dishes for new variants.”[5] In other words, variants are likely to continue to emerge faster than the medical field can react.

Going Forward

The news isn’t all bad. The Wall Street Journal editorial staff reports, “The good news is we’re better prepared if Omicron does spread and proves more virulent than other strains. BioNTech and Pfizer say they can quickly adjust their mRNA vaccine to combat the new variant if necessary. Moderna plans to rapidly advance an Omicron-specific booster candidate.” The Economist staff agrees. They write, “The world is better placed to resist it than when Delta emerged in India at the end of last year.”[6] Being better prepared, however, doesn’t mean we shouldn’t be concerned.

Pharmaceutical companies will continue to play whack-a-mole with new variants and we know variants will continue to emerge and spread. The best hope for moving forward is getting the world’s population vaccinated. In South Africa, where the Omicron variant was first detected, only 25% of the population is vaccinated. The Wall Street Journal editorial team adds, “Anti-viral Covid pills by Merck and Pfizer — which the FDA ought to approve pronto — have shown remarkable success in trials at preventing severe illness in high-risk groups. Both drug makers have licensed their pills to other manufacturers, so they should be widely available within months.”

What the Wall Street Journal team doesn’t want to see is more lockdowns. They write, “One clear lesson from the pandemic is that lockdowns do more harm than good.” It’s true that more lockdowns will only contribute to current supply chain woes. On the other hand, the Economist notes, “If there is one lesson the covid-19 pandemic has taught the world, it is that acting early pays off. Wait a week for better data on which to base a decision and you can find yourself down a path of no return, with cases rising steeply.” Sensible steps, like increasing testing, wearing masks, and getting vaccinated, are the best way to “act early” and avoid lockdowns. Even then, the Wall Street Journal reluctantly concludes, “Americans and the rest of the world need to learn to live with an ever-mutating virus.”

Concluding Thoughts

Days before the Omicron variant was announced, Sean Ashcroft, Editor-in-Chief at Supply Chain Magazine, wrote, “The pummeling taken by the global economy over the past two years is subverting the laws of demand and supply and could make volatility the new normal for supply chains, a leading business analyst warns. Writing for the Financial Times, David Bowers of Absolute Strategy Research, says the seismic effect of the pandemic has changed the complexion of global economics. … Bowers says the longer the supply chain crisis continues, the more likely it is that businesses will begin to rethink their business models — with inventory build-up being one such change.”[7] The growing consensus seems to be that the pandemic will continue to affect supply chain operations and the global economy for a prolonged period of time (i.e., they are going to suffer from long-haul Covid). There are sensible things that can be done to cope, but resistance to such actions is stout. Commonsense appears to be another victim of Covid.

Footnotes
[1] Brian Milner, “Are broken supply chains here to stay? Why we’re running out of everything,” The Globe and Mail, 27 November 2021.
[2] Susan Morse, “WHO declares COVID-19’s Omicron a ‘Variant of Concern’,” Healthcare Finance, 27 November 2021.
[3] Meryl Kornfield, Adela Suliman, Christine Armario and María Luisa Paúl, “What to know about the omicron variant of the coronavirus,” The Washington Post, 26 November 2021.
[4] Richard Pérez-Peña and Jason Horowitz, “New ‘Variant of Concern’ Fuels Global Fear of Another Virus Surge,” The New York Times, 26 November 2021.
[5] Editorial Team, “The Omicron Variant Panic,” The Wall Street Journal, 26 November 2021.
[6] Staff, “Countries are scrambling to stop a new covid variant,” The Economist, 26 November 2021.
[7] Sean Ashcroft, “Pandemic: will volatility be ‘new normal’ for supply chains?” Supply Chain Digital, 24 November 2021.