The recently announced two-phase lockdown in Shanghai could have a worse impact than the initial Wuhan coronavirus (COVID-19) lockdowns in 2020, especially on the supply chain. The Chinese government implemented the latest COVID measures when the initial two weeks of targeted, temporary lockdowns failed to contain the new outbreak.
First phase of the lockdown applies to the eastern part of Shanghai, which includes the financial center, from March 28 to April 1. The western part will be covered in the second phase, with the lockdown supposedly running from April 1 to April 5.
But Shanghai expanded its shutdowns on Wednesday, March 30, as the number of local coronavirus cases ballooned to 5,982. The city reported 5,656 asymptomatic COVID-19 cases and 326 symptomatic cases on March 29, up from 4,381 new asymptomatic cases and 96 symptomatic cases from the day prior.
Several residents living in western districts have received notice from their housing committees that they would be stopped from leaving their compounds for the next seven days.
Jon Monroe of Monroe Consulting said while ports are "open," the workers and truck drivers are locked in their homes, limiting the capability of factories to deliver containers to ports, and near impossible to get them to Yangshan and Waigaoqiao.
With the lockdowns in place, residents will not be allowed to leave their homes and public transport will be suspended. Private cars will only be allowed to make "necessary" journeys, as well. All firms and factories are to suspend their production, and people are required to work from home unless they are involved in essential services or food supply.
Lockdowns put shipping companies on edge
C.H. Robinson's client advisory indicated that offices and businesses that are not considered essential will be closed, and public transport suspended. This will create major shortages in manpower and trucking availability.
The 3PL provider also provided specifics, including the status of road transportation, ocean terminals, warehouses, airport cargo and customs brokerage. (Related: World braces for renewed supply chain crisis as COVID outbreaks shut down highly vaccinated China.)
Seko Logistics, meanwhile, sent an alert to its clients on March 27, warning them of additional lockdowns. Brian Bourk, the company's chief growth officer, said: "This may [have] a significant impact on importers for all transportation modes, and we’re monitoring the situation with further updates from our team in China."
Worldwide Logistics also sent emails to its clients explaining that the surge of COVID testing in Shanghai is delaying the usual 12-hour response time, therefore slowing the ability of drivers to travel, as they must have a clear test result to be able to drive.
The email also noted that container movement between Shanghai and nearby industrial areas in Jiangsu province is restricted, and no opening schedule has been announced yet.
Products that are supposed to be shipped out of Shanghai are mostly summer-related, from Dollar General products like beach towels, swim vests and garden tools, to Walmart goods for the spring and summer season. (Related: China implements strict lockdown, claiming they have to stop the spread of COVID... the supply chain will be impacted.)
Qingdao is seeing a 30 percent drop in trucking power, while the whole city transportation process is slowing down.
UCCS Economist Joe Craig also said the lockdowns could cause a ripple effect down the supply chain. "Prices will go up slightly. How much we notice it depends on how long it lasts and how quick they jump back because there is always a surplus in the supply chain," he said.
It could also impact how many staples are available. Despite necessities being available right away, a lot of firms worry about repeat business. If they see a lot of volatility in prices immediately, then there is little chance for repeat business.
"If prices are allowed to fluctuate more, you'll see less shortages. If prices aren't allowed to, you'll see firms run out of things faster," he added.
Local businesses could also be forced to raise prices to compensate for the amount they have to pay to purchase things for consumers.
Follow Collapse.news and Pandemic.news for more updates about the impact of COVID lockdowns on the supply chain.
Watch the video below to know more about how the Shanghai lockdown could threaten the Chinese economy.
This video is from the Chinese taking down EVIL CCP channel on Brighteon.com.
More related stories:
Global supply chain crisis expected to last another TWO YEARS.
Supply chain crisis threatens lucrative holiday sales of many companies.
Biden’s economic agenda, COVID policies make supply chain crisis worse.
Shipping costs to the US surge as supply chain crisis continues to accelerate.
World braces for renewed supply chain crisis as COVID outbreaks shut down highly vaccinated China.
Sources include:
Please contact us for more information.