Accounting for a third of the world’s total industrial capacity, this is how COVID lockdowns in China disrupted the supply chains globally.
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Despite the fact that Shenzhen, China, allowed factories and public transportation to reopen on Friday following a six-day lockdown to prevent the spread of COVID-19, global supply lines have already been disrupted.
China’s zero-tolerance stance to the virus has already caused fresh supply chain snarls and logistical delays, according to A.P. Mller – Maersk A/S, the world’s largest container shipping business by capacity.
In a note to clients acquired by Bloomberg, Maersk stated, “While manufacturing also takes place in other parts of the country, these delays will still affect output, though not drastically.”
Following the six-day shutdown in Shenzhen, Maersk has implemented contingency plans in China. Factory closures occurred as a result of the disruption, and the transportation industry came to a halt.
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Because China accounts for a third of the world’s total industrial capacity, whatever occurs there has a significant impact everywhere. Shenzhen is a major manufacturing centre in China, with one of the country’s largest ports. If you buy something electrical on Amazon, it was most likely built in China and shipped out on a container ship.
The number of vessels waiting at several Chinese ports has increased since the lockdowns, according to Adam Compain, senior vice president of supply chain analytical research firm project44.
“We saw a 28.5% increase in the number of vessels waiting outside of the port of Yantian which is a major export port to Europe and North America,” Compain said.
Yantian is located in the same geographical area as Shenzhen. Yantian’s operations were constrained last year owing to COVID outbreaks, which resulted in major product supply delays to the United States.
According to Steven Lynch, managing director of the British Chamber of Commerce in China, “it’s a double-edged sword.”
“China comes down very quickly which causes huge disruptions but then, things will go back to normal relatively quickly.
“We’ve seen these lockdowns before so companies have put in a robust supply chain management,” Lynch explained.
The good news is that President Xi Jinping promised on Friday to reduce the economic effect of the virus’s fight. The recent lockdown of numerous cities and tens of millions of people, as well as factories, is already having a spillover impact at the worst possible time, as war and inflation have worsened supply chain problems.