How lockdowns in China have further strained the supply chain

BEIJING – China’s growing Kovid-19 sanctions are further disrupting the global supply chain for consumer electronics, car parts and other products.

A growing number of truck drivers in Chinese cities are required to undergo daily Covid PCR tests or quarantine drivers considered at risk of infection before being allowed to cross municipal boundaries. Measures have limited how quickly operators can move components between plants and products from plant to port.

Shanghai and other major Chinese cities have imposed long, severe lockdowns to try to control the Kovid outbreak. Previous barriers to the supply of goods from Chinese factories to buyers around the world were mainly related to the temporary closure of shipping ports, including Shenzhen in southeastern China in May and June last year and then near Shanghai last summer.

“The problem is not the ship – it’s the goods not coming because there are no trucks,” said Jared Ward, chief East Asia business development officer at Usain Logistics’ Shanghai office, a large Japanese supply chain management company.

Truck drivers tests have been postponed because some city residents are conducting mass tests. Shanghai examined all 25 million people within its borders in one day on Monday and identified another 21,000 cases on Thursday.

Nowadays, there is a severe shortage of truck drivers in neighboring cities, such as Shanghai and electronics manufacturing center Kunshan. Many electronics parts manufacturers are closing down in Kunshan.

“Apple’s main electronics suppliers, to Tesla, are all based there,” said Julie Gardman, CEO of Everestream, a supply chain risk management affiliate of DHL based in San Marcos, Calif.

Apple declined to comment, and Tesla did not immediately have a question.

Many factory workers have tried to stay open by staying at the site without going home. In some cities in northeastern China, workers have been sleeping on mats on the floor for four long weeks. Companies are storing goods in nearby warehouses while waiting for normal truck traffic to resume.

But as the lockdown spread to cities like Shanghai, Changchun and Shenyang, the materials for assembling factories began to run out. Some are sending their staff home until further notice.

To make car seats, for example, various springs, bolts and other materials are required. Mr Ward said the car seat manufacturers had run out of material. Volkswagen says it has closed a factory outside Shanghai.

Shanghai’s main rival in electronics manufacturing, Shenzhen, has emerged from the lockdown, despite increasing cases. It is freeing workers and factories to resume full-speed production.

Western retailers and manufacturers have tried to adapt to previous supply chain problems in China by switching from ships to airfreight, but airfreight rates have more than doubled over the past year.

Zvi Schreiber, chief executive of freight booking platform Freightos, said the almost total suspension of passenger flights in and out of Shanghai had almost halved airfreight capacity there. The war in Ukraine has forced many airlines to schedule long flights around Russia and Ukraine, meaning each plane can make fewer trips a week and often carry less weight on each flight.

The war in Ukraine has also begun to hurt the availability of Soviet-era Antonov cargo ships, Mr Schreiber said. These workhorse in the airfreight industry have been run almost entirely in recent years by Ukrainian maintenance bases that are now closed.

For companies, any additional disruption to the global supply chain will occur at a particularly busy moment, on top of rising prices for raw materials and shipping, with extended delivery times and staff shortages.

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