Lockdown in Shenzhen Poses a Threat to a Struggling Global Supply Chain

Global shipping
lockdown-in-shenzhen-poses-a-threat-to-a-struggling-global-supply-chain

The Ladingo Team 

While the Ukraine-Russia war continues to rage and disrupt global supply chains, the Chinese government announced a week-long lockdown in Shenzhen, Guangdong, China in response to the Omicron outbreak. The new lockdown threatens to worsen the ongoing disruptions in the global supply chain, which is already struggling with driving costs up, delivery delays, and shortages. Here’s all you need to know about how the current lockdown might threaten your business’ ability to ship goods from China.

The city of Shenzhen is a manufacturing powerhouse, home to the world’s second-busiest port, and known as “China’s Silicon Valley”. Currently, it has been announced that the shutdown will continue until the 20th of March. However, many believe that due to Omicrons’ high infection rate and China’s zero covid policy, the shutdown may even be extended for a month. This will cause another jolt to the global supply chain.

How might Shenzhen’s lockdown threaten global supply chains?

Plants shutdown 

Shenzhen is one of China’s leading manufacturing regions as well as one of the largest manufacturing bases in the world. Therefore, many businesses, E-commerce sellers, and Amazon sellers depend on Shenzhen for sourcing and running their business. As for now, all production and business activities are suspended except those providing necessary public services such as water, electricity, gas, and food. Plants shut down will cause shortages and delays in supply. If the lockdown is extended, in that case, the best option is to source from other provinces that are not under lockdown at this time.

Freight forwarding 

As of right now, all ports in China, including those in Shenzhen, are operating and loading cargo as normal, striving to keep the supply chain running despite the local lockdown. Ports continue to function, which is good for global supply chains, but they rely on trucks and warehouses, which are closed.  That means that their shutdown will affect the port’s ability to function normally.

Container Rates

Furthermore, the lockdown in many other parts of China causes an increase in the number of container ships waiting near China’s ports, such as Qingdao, Shanghai, Ningbo. Around 70 vessels have been spotted off Qingdao. With the new omicron outbreak in China, it is highly likely that container rates will rise.

In some ways, it seems like the supply chain might be less affected this time than in previous lockdowns. Meanwhile, it is said that this is the worst outbreak China has seen in two years, which means that there is still a chance for ports to shut down. The only thing we can do now is to watch where things are heading in China. In the meantime, click here to learn more about how to strengthen your supply chain during disruption.

 

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