Major China COVID Lockdowns to Further Disrupt Shipping, Manufacturing

By Brendan Menapace

China is currently facing its largest COVID outbreaks since the start of the pandemic as the Omicron variant surges throughout much of the country. As expected, the Chinese government has responded with aggressive lockdowns, including in shipping and manufacturing hubs, which will likely contribute to additional supply chain delays just as things looked to be improving.

The Chinese government placed the city of Shenzhen under lockdown following rising COVID-19 cases in the city of 17.5 million people. Citizens are bound to their homes except for three mandatory COVID tests, and all public transportation and business has been suspended.

Shenzhen is a port city near Hong Kong, and logistics companies including Seko, Worldwide Logistics Group and Orient Star Group reportedly issued disruption advisories, according to Freight Waves. Additionally, trucking restrictions for vehicles going in and out of Shenzhen are in effect, which adds another factor to the slowdown.

The lockdown is due to last at least a week.

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Shenzen is also a major manufacturing hub. Foxconn Technology Group, which makes components for Apple iPhones and iPads, is located there, and has already shut down operations for the week.

Dongguan, another manufacturing hub in southern China, partially locked down down on Tuesday. According to CNBC, the city's targeted shutdowns will allow some manufacturing activity to continue under strict virus control measures. Changchun, an industrial center in eastern China, is also on lockdown.

The lockdowns come as part of China's ongoing "zero-COVID" strategy, meaning that whenever there is a breakthrough of cases, the area shuts down. In some cases, the outbreaks were relatively small, but the current outbreak is the worst the country has seen since Wuhan, with cases tripling over the weekend, according to The Guardian.

As for getting products out of Shenzhen, experts aren't sure of any viable alternatives. The first idea would be to reroute boxes to air freight rather than ocean, but since people can't leave their homes to go to work, airport staff would be unable to report for duty. Hong Kong is also currently experiencing a sizable outbreak, and experts warn that if the numbers in Shenzhen continue to rise, the shutdown could last longer than the projected week.

We've now seen how even short-term disruptions can ripple for weeks or months throughout the supply chain. Combined with potentially skyrocketing shipping costs, these new disruptions likely spell additional challenges for the promo industry later in 2022.