COVID Outbreaks in Another Major Chinese Manufacturing Hub Cause Year-End Slowdowns

COVID outbreaks in China's Zhejiang province, a major manufacturing hub, have caused factories and ports to shut down, creating even more backlogs for items like plastics, apparel and textile dyes.

Since the first case was recorded on Dec. 6, Zhejiang has reported 217 locally transmitted confirmed cases, according to Reuters. Previously, the province reported only one local case during 2021.

As a result, thousands of people are now forced to quarantine in the cities of Ningbo, Shaoxing and Hangzhou—three cities that accounted for more than half of the Zhejiang province's economic output in 2020.

Textile dye company Zhejiang Runtu reportedly said that all of its units in the Zhejiang Shangyu Economic Development zone have been halted since last week. The SEDZ reportedly accounts for 95% of the company's revenue.

Some Chinese companies suspend production in Zhejiang province on virus outbreak https://t.co/vJTQt66VK9 pic.twitter.com/ARDjK8Xc8h

— Reuters (@Reuters) December 13, 2021

China's "zero-COVID" approach means aggressive lockdowns at the first sign of outbreak, which we've seen throughout the year in shipping and manufacturing hubs, adding to existing supply chain issues.

With the city of Ningbo home to one of the world's largest container ports, according to CNN, these current shutdowns could lead to more slowdowns in global shipping.

"Further supply chain disruption is a significant possibility," analysts at Capital Economics said, according to CNN.

“The outbreak in three Zhejiang cities – Ningbo, Shaoxing and Hangzhou – was developing at a ‘relatively rapid’ speed, while the situation nationwide was largely stable.”

More than 50,000 are quarantined & half a million people’s conditions monitored. https://t.co/CPX7okXdEq

— Laura Miers (@LauraMiers) December 15, 2021

According to the South China Morning Post, port operators in southern China are anticipating suspensions up to six weeks over the Lunar New Year holiday due to quarantine measures.

“This suspension is caused by the COVID-19 quarantine requirement for ship crew plying between South China and Hong Kong upon their return from the Chinese New Year 2022 holidays,” shipping company Hapag-Lloyd said in a statement last week, per SCMP.

Companies such as Ocean Network Express and Evergreen have also told customers that they are temporarily halting cargo bookings going to small ports in certain Chinese provinces.

More than a dozen Chinese listed companies have said they had suspended production in coronavirus-hit parts of China's eastern Zhejiang province in response to local government's COVID-19 curbs. https://t.co/WhMTxk1c4j

— Yahoo News (@YahooNews) December 13, 2021

While analysts say this will likely not have any significant impact on major deepwater ports worldwide, the delays within Chinese provinces due to strict quarantine rules could create a "ripple effect," some say.

With already sluggish shipping times due to holiday-season volume and existing supply chain slowdowns, another variable thrown into the mix is the last thing promo companies sourcing goods from China need right now.