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Friday, October 7, 2022

Lockdowns in China cause truck shipments to be halted and factories to be closed

Increased limitations on imports from China under the Covid-19 agreement are causing more disruptions to global supply chains for consumer electronics, automobile components, and other commodities.

More Chinese cities are mandating truck drivers to undergo daily Covid pulse oximetry tests before they are allowed to cross municipal borders, and more cities are quarantining drivers who are assessed to be at danger of contracting an infection. Drivers’ ability to transport components between manufacturers and merchandise from plants to ports has been slowed as a result of the restrictions.

Lockdowns have been established in Shanghai and other large Chinese cities for extended periods of time in an attempt to contain Covid outbreaks. Temporary shutdown of shipping ports, such as those in Shenzhen, southeast China, in May and June last year and later in the Shanghai area this summer, were the primary cause of previous pauses in the flow of products from Chinese industries to purchasers around the globe.

The testing of truck drivers has been put on hold since some communities are doing mass testing of their inhabitants at the same time. During a single day on Monday, Shanghai tested almost all of the 25 million individuals living inside its boundaries, and another 21,000 cases were discovered on Thursday.

There is now a severe scarcity of truck drivers in Shanghai and surrounding areas like as Kunshan, which is a hub of electronics manufacturing operations. In Kunshan, a large number of electronic component makers are closing their doors.

Many industries have attempted to keep their doors open by requiring employees to remain on the premises rather than go home. Employees in certain places in northern China have been sleeping on mats on the floor for as long as four weeks, according to reports. Companies have been keeping items in neighbouring warehouses as they await the resumption of regular truck traffic.

Lockdowns in major Chinese cities such as Shanghai, Changchun, and Shenyang have dragged on for weeks, and companies are running out of supplies to construct them. Some companies have sent their employees home till further notice.

Car seats, for example, need a variety of springs, fasteners, and other components to be constructed. According to Mr. Ward, car seat manufacturers have ran out of components. In a statement, Volkswagen stated it had shuttered a facility outside of Shanghai.

While the number of cases in Shanghai continues to rise, Shenzhen, Shanghai’s primary competitor in the electronics manufacturing industry, has emerged from its state of lockdown. Workers and companies in the area will be able to restart full-speed production as a result of this.

As a result of earlier supply chain challenges in China, retailers and manufacturers in the West have attempted to adjust by moving from ships to aeroplanes; nevertheless, air freight charges have more than quadrupled since last year.

In response to the near-total stoppage of passenger flights into and out of Shanghai, Zvi Schreiber, the CEO of Freightos, a freight booking platform, estimates that the city’s aviation freight capacity has been reduced by nearly half. Many airlines have been compelled to book lengthier flights across Russia and Ukraine as a result of the conflict in Ukraine, which means that each jet can make fewer journeys in a week and may frequently carry less weight on each flight.

According to Mr. Schreiber, the conflict in Ukraine is also beginning to have an impact on the availability of Antonov freighters from the Soviet period. Over the last several years, these workhorses of the air freight business were mostly maintained by Ukrainian maintenance depots that are now no longer in operation.

Additionally, any new interruptions to the global supply chain would come at a particularly inconvenient time for businesses, given the growing costs of raw materials and transportation, combined with prolonged delivery times and a scarcity of workers, already present in the market.

David Faber
I am a Business Journalist of The National Era
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