Shanghai's lockdown hits global supply chains, may affect Christmas commodity production

Shanghai has been hit hard by the new crown epidemic and closed the city again. The temporary closure of many factories has also led to the crisis of supply chain interruption. Some analysts say that if the zero-clearing policy continues, China's supply chain risks will continue to rise, which will not only have an impact on the Chinese economy, but will even affect foreign orders at the end of the year.

On April 6 , Shanghai announced that the number of infected cases was close to two10,000 cases, a new high. Chinese state media quoted Gu Honghui, the head of the epidemic control team, as saying that the city's epidemic " is still running at a high level " and that the " situation is extremely severe " . The closure measures originally scheduled to be lifted this Tuesday have also been extended. The move to close the city has also raised international concerns that it will impact the global supply chain.

Containers pile up in Chinese ports

Japanese shipping company Ocean Network Express told its clients that Shanghai is facing a shortage of trucks responsible for hauling containers from the port, hampering customs clearance of imported goods, even if the port is operating normally, " very bad," Bloomberg reported on Wednesday. A " critically high " number of reefer containers and dangerous goods piling up in port warehouses means that some vessels carrying these categories may not be able to unload more at port, resulting in delayed deliveries, potentially at More delays and higher freight rates in the coming months, or have to arrange to other ports.

Doug Barry , a spokesman for the US-China Business Council, said some member companies with contacts in China have experienced business disruptions, even as Chinese factories have tried to isolate workers in the workplace to maintain operations, but Barry says " it's unsustainable, " in addition to member companies experiencing the brunt of product delivery difficulties.

“ Then there’s the issue of loading and unloading ships, which is a critical time as Christmas orders need to be filled by this summer, and port blockages can lead to costly delays and a shortage of goods on shelves during the year-end holidays. Airfreight is very expensive. , and operate fewer flights. In addition, some commodities, such as auto parts, cannot be transported by air because they are too heavy. " Barry explained to this station the difficulties that American companies are currently encountering in response to Shanghai's clearing.

Barry believes that supply chain shortages will worsen if the reset policy and shutdowns continue. He also criticized the Chinese authorities' insistence on the " zero reset " policy not only hindering economic growth, but also local people's concerns about people with restricted movement and no access to other medical services. Dissatisfaction will also increase day by day.

The bigger economic problems behind the lockdown

In March of this year, in response to the outbreak of the new crown epidemic in many places, manufacturing centers including Shenzhen and Changchun had closed cities and closed factories. Some enterprises and factories were allowed to maintain operations under " closed- loop production " , which means that factory employees must live in the factory buildings. " Isolation " and " work " , even so, the production of large factories such as Samsung Electronics and Tesla is still affected.

In addition, many major notebook OEMs in Taiwan also mentioned on April 1 that the Shanghai epidemic has impacted the overall supply chain logistics, including indirectly affecting the shipments and incoming materials of other factories. Quanta Electronics pointed out that for many industries In terms of supply chains in Kunshan and Shanghai, the closure of Shanghai will not only impact a single industry or manufacturer.

The British Guardian quoted Alex Holmes , emerging Asia analyst at Capital Economics, an independent economic research firm , as saying that the spillover effects of China's new crown pneumonia epidemic to the rest of Asia have so far been relatively small, but " The potential for major supply chain disruptions remains a significant and growing risk " , and the longer the current outbreak continues, the greater the chance of supply chain disruptions, he said: " Another risk is that the number of global supply chains After the month-long hiatus, it was already very tense, and now a small bottleneck can very well have a huge impact. ”

Shehzad Qazi , executive director of China Beige Book International , an American independent research organization that has long been concerned about China's economic development , held a similar view to Barry when replying to this station's comment. He believed that as long as If any form of zero policy continues, supply chain risks from China will continue to rise. In addition, he also pays attention to China's retail and service industries, which are gradually shrinking due to the impact of epidemic prevention policies: " But for the market, it is still There is a bigger economic problem, over the past two years, China's manufacturing sector has driven growth through strong production and exports, while retail and services have barely survived. "

In a written reply to this station, Qazi said that in a year when the 20th National Congress of the Communist Party of China is about to be held and the politics are particularly sensitive, a new wave of epidemics is weakening China's manufacturing industry, which may deprive the Chinese economy of any reliable growth momentum.