Lockdowns in China Block Truck Shipments and Close Factories

BEIJING — Increasing COVID-19 restrictions in China are creating more disruption 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 PCR tests for Covid before allowing them to cross municipal borders or are quarantining drivers deemed at risk of infection. The measures have limited how quickly drivers can move components between factories and goods from plants to ports.

Shanghai and other major Chinese cities have imposed long and strict lockdowns to try to control covid outbreaks. Previous disruptions in the supply of goods from Chinese factories to buyers around the world have mainly involved the temporary closure of shipping ports, including in Shenzhen, in southeast China, in May and June last year and then around Shanghai last summer.

“The problem isn’t the ships, it’s that no cargo is coming in because there are no trucks,” said Jarrod Ward, director of East Asia business development at the Shanghai office of Yusen Logistics, a large Japanese supply chain management company. .

Testing of truck drivers has been delayed because some cities are mass testing residents. Shanghai essentially tested all 25 million people within its borders in a single day on Monday and detected another 21,000 cases on Thursday.

Now, there is a severe shortage of truckers in Shanghai and nearby cities like Kunshan, a hub for electronics production. Many electronic component manufacturers are closing in Kunshan.

“Apple’s major electronics suppliers, Tesla, they’re all based there,” said Julie Gerdeman, chief executive officer of Everstream, a supply chain risk management affiliate of DHL based in San Marcos, California.

Apple declined to comment and Tesla did not immediately respond to questions.

Many factories have tried to stay open by having workers stay on site instead of going home. Employees have been sleeping on mats on the ground for four weeks in some northeastern Chinese cities. Businesses have been stocking products in nearby warehouses as they waited for normal truck traffic to resume.

But as lockdowns drag on in cities like Shanghai, Changchun and Shenyang, factories are starting to run out of materials to assemble. Some are sending their workers home until further notice.

Making car seats, for example, requires different springs, bolts, and other materials. Mr. Ward said that car seat producers have run out of components. Volkswagen said the company has closed a factory on the outskirts of Shanghai.

While Shanghai’s cases are on the rise, its main rival in electronics manufacturing, Shenzhen, has emerged from lockdown. That is freeing up workers and factories there to resume production at full speed.

Retailers and manufacturers in the West have tried to adjust to past supply chain difficulties in China by switching from ships to air freight, but air freight rates have more than doubled from last year.

The near-total suspension of passenger flights in and out of 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 to 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 starting to affect the availability of Soviet-era Antonov freighters, Schreiber said. These workhorses of the air transport industry have been kept in operation in recent years almost entirely thanks to Ukrainian maintenance bases that are now closed.

For businesses, any further disruption to the global supply chain would come at a particularly tense time, on top of rising prices for raw materials and shipping, along with long lead times and worker shortages.

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