BEIJING — China’s growing Covid-19 restrictions are creating further disruptions to global supply chains for consumer electronics, auto parts and other goods.
A growing number of Chinese cities are requiring truck drivers to take daily Covid PCR tests before allowing them to cross municipal borders or are quarantining drivers deemed to be at risk of infection. The measures have limited how quickly drivers can move components between factories and goods from factories to ports.
Shanghai and other major Chinese cities have imposed long and strict lockdowns in an attempt to control Covid outbreaks. Previous disruptions in the supply of goods from Chinese factories to buyers around the world mainly involved the temporary closure of shipping ports, including Shenzhen in southeast China in May and June last year, then near Shanghai last summer.
“The problem isn’t the ships, it’s that there’s no freight because there’s no trucks,” said Jarrod Ward, business development manager for Asia. East at the Shanghai office of Yusen Logistics, a large Japanese supply chain management company.
Truck driver testing has been suspended as some cities conduct mass testing of residents. Shanghai tested nearly all of the 25 million people within its borders in a single day on Monday and detected another 21,000 cases on Thursday.
Today, there is a severe shortage of truck drivers in Shanghai and neighboring cities like Kunshan, an electronics production hub. Many electronic component manufacturers are closing in Kunshan.
“Major electronics suppliers from Apple, Tesla, they’re all based there,” said Julie Gerdeman, chief executive of Everstream, a DHL-based supply chain risk management subsidiary. San Marcos, California.
Apple declined to comment, and Tesla did not immediately respond to questions.
Many factories have tried to stay open by asking workers to stay put instead of returning home. Employees have been sleeping on mats on the floor for four weeks in some cities in northeast China. Businesses have stored goods in nearby warehouses pending the resumption of normal truck traffic.
But as lockdowns spread in cities like Shanghai, Changchun and Shenyang, factories are running out of materials to assemble. Some are sending their workers home until further notice.
The manufacture of car seats, for example, requires different springs, bolts and other materials. Mr Ward said car seat makers were running out of components. Volkswagen said it closed a factory outside Shanghai.
As Shanghai’s cases rise, its main rival in electronics manufacturing, Shenzhen, has emerged from lockdown. This frees up workers and factories there to resume production at full speed.
Western retailers and manufacturers have tried to adapt to previous supply chain difficulties in China by switching from ships to air freight, but air freight rates have more than doubled from a year ago.
The near total suspension of passenger flights to and from Shanghai has roughly halved air cargo capacity there, said Zvi Schreiber, chief executive of Freightos, a cargo booking platform. The war in Ukraine has forced many airlines to schedule longer flights around Russia and Ukraine, meaning each plane can make fewer trips in a week and can often carry less weight on each flight. .
The war in Ukraine is also beginning to hurt the availability of Soviet-era Antonov freighters, Schreiber said. These workhorses of the air cargo industry have been maintained in recent years almost entirely by Ukrainian maintenance bases which are now closed.
For businesses, any further disruption to the global supply chain would come at a particularly difficult time, in addition to rising raw material and transportation prices, as well as extended delivery times and labor shortages. work.