Since the pandemic and the subsequent lockdowns, the global supply chain has been greatly impacted. The lockdown of Shanghai, China's most important commercial city, was extended in early April without a set end date while government officials reviewed city-wide results. The town has been severely impacted by the Omicron wave, which has been described as China's most severe since the COVID-19 outbreak in late 2019.

A Deepening Crisis

A new wave of asymptomatic infections prompted the Chinese government to declare a phased lockdown of Shanghai, the country's most populous city, in March. The lockdown was extended on April 5th due to the high number of positive cases recorded the day before. This indefinite lockdown extension put additional strain on the global supply chain as logistics providers struggled to get trucks into and out of the major port city.

According to a Fitch rating research, “China’s latest lockdown threatens to intensify global supply chain disruption and push up elevated shipping rates and input costs.” It also states that freight traffic volume in the Shanghai metropolitan area plunged in early April and remains 80% below what it was in late March because of the lockdown extension.

It is noteworthy that Shanghai handles a fifth of China’s port volumes, and China accounts for 15% of global merchandise exports. Since the lockdown, Tesla had shut down its Giga factory, which produces about 2,000 electric cars a day, on March 28th. Over 30 Taiwanese electronic manufacturers closed their factories near Shanghai in early April. This disruption in production has heightened risks for China’s slowing economy.

Impacts Beyond Shanghai

China’s strict COVID-19 lockdowns are disrupting the supply chains of everything from raw materials to manufactured goods. Due to Shanghai’s status and role in global trade, the lockdown would have severe implications for the rest of the world.

In fact, Shanghai and the regions near it are home to the most significant manufacturing hubs. These hubs rely on essential inputs that arrive through the Shanghai port, where they export finished products.

Disruption in the operations of these manufacturers means that the supply of critical goods will be hampered. Despite the fact that authorities claim the Shanghai port has remained operational thanks to a so-called closed-loop system in which workers remain on-site, ships have piled up outside the port. This situation has slowed down the recovery of the global supply chain from the pandemic's effects over the last two years.

Export Portal Is Here for You

Whether you are looking for a new way to find international B2B trade partners or you want to stay informed on the latest updates in international trade, Export Portal is here to help. Subscribe to our newsletter to stay informed, or register for free today!

#ExportPortal #Shanghailockdown #lockdownextension #globalsupplychain #lockdownimpact #China