• 'Everything is halted': Shanghai shutdowns are worsening shortages

    From buh buh biden@21:1/5 to All on Wed Apr 27 03:56:06 2022
    XPost: alt.business, talk.politics.guns, alt.fan.rush-limbaugh
    XPost: sac.politics

    Thousands of air fryers are stuck in factories, warehouses and ports in
    central China, where shutdowns have stalled millions of dollars worth of inventory for Yedi Houseware, a family-run business in Los Angeles.

    How quickly those backlogged appliances make it to the United States could
    have wide-ranging implications across the U.S. economy, as domestic manufacturers and retailers brace for another round of disruptions from
    recent covid-related shutdowns in Shanghai, China's largest city. White
    House officials are paying close attention to the disruptions to monitor
    the potential impact on the U.S. economy.

    "Things are getting crazy again," said Bobby Djavaheri, the company's president. "Everything is halted. There are closures this very minute that
    are adding to the supply chain nightmare we've been experiencing for two years."

    Other executives are dealing with similar scrambles as the situation in
    China appears to change every day, sweeping up many different sectors.

    Widespread covid outbreaks in China have bought entire cities to a
    standstill and hobbled manufacturing and shipping hubs throughout the
    country. An estimated 373 million people - or about one-quarter of China's population - have been in covid-related lockdowns in recent weeks because
    of what is known as the country's zero covid policy, according to
    economists at Nomura Holdings. There are also fears that new lockdowns
    could soon take hold in the capital city, Beijing, escalating the threat
    to the global economic recovery.

    Anxiety over new disruptions has already caused the Chinese stock market
    to fall sharply, weighing on U.S. stock indexes as well.

    And there are signs things could only get worse. Continuing lockdowns in Shanghai - a major hub for America's semiconductor and electronics supply chains - has set up automakers, electronics companies and consumer goods
    firms for months of delays and higher costs.

    The challenges come on top of more than two years of global shipping disruptions that some had hoped would ease this year.

    Tech giants and major automakers rely heavily on Shanghai-based suppliers
    and ports. Roughly one-half of Apple's top suppliers, for example, are
    based in or near the city, according to an analysis by Nikkei Asia. (Apple
    did not immediately respond to requests for comment.) Meanwhile,
    Volkswagen's chief executive said this month that the automaker is
    "temporarily unable to meet high customer demand" because of ongoing
    lockdowns. The company, which had to stop production at certain facilities
    for more than a month for covid-related reasons, says it is gradually
    resuming production now.

    "If Shanghai continues being unable to resume work and production, from
    May, all tech and industrial players involving the Shanghai supply chain
    will completely shut down, especially the auto industry!" Richard Yu, head
    of consumer and auto business at Chinese tech giant Huawei, was reported
    to have said on the social media platform WeChat.

    The delays and closures are adding to costs and could pose another threat
    to long-term inflation, which is already at a 40-year high. Yedi
    Housewares, for example, raised prices on all of its products, including
    air fryers, electric pressure cookers and bread makers, by 10 percent in January.

    Costs have continued to climb since then, in part because of the war in Ukraine. The price of plastic, a major component in air fryers, is up
    about 5 percent this year, Djavaheri said. The company is also paying more
    for transportation, since it's begun moving goods by truck from Shanghai
    to ports in Ningbo, three hours away, in hopes of putting them on a ship
    there.

    White House officials are closely monitoring the situation in Shanghai,
    with the State Department providing frequent updates on the potential
    impacts. New economic data from March shows Chinese exports of good rose
    by 15 percent relative to last year, but this data does not reflect the
    impact of the Shanghai lockdown that began at the end of last month,
    according to a White House official, who spoke on the condition of
    anonymity to provide internal administration assessments.

    The administration is already seeing "significant impacts" to airports
    critical to air cargo shipments and links in the supply chain such as
    factories and warehouses, the person said. Despite the closure of the
    port, White House officials are seeing alternate ports ratcheting up their work, relieving some of the expected pressure for consumers.

    Mark Beneke, who co-owns a used car dealership in Fresno, Calif., says
    it's become increasing difficult to secure parts for Asian-made vehicles
    like Hyundai Sonatas and Kia Optimas since the Shanghai lockdown began a
    month ago.

    Used car prices are already up 35 percent from a year ago, according to
    the Bureau of Labor Statistics, and Beneke says he expects them to climb
    even higher in coming weeks as a result of new shortages and delays.

    "We were expecting prices to start coming down this summer, but it looks
    like they're going to keep going up," he said.

    In some cases, though, retailers are better positioned to weather the
    latest challenges than they were a year ago. Many have stashed away extra inventory in U.S. warehouses and stores to guard against supply chain
    delays. Roughly 90 percent of goods at grocery and drugstores are in
    stock, according to data analytics firm Information Resources. And the
    number of import containers sitting on the docks for more than nine days
    at the ports of Los Angeles and Long Beach has been cut by one-half since October.

    At the same time, consumer demand for many goods - including clothing,
    toys and furniture - appears to be waning as people spend more on travel, dining out and other experiences that they largely avoided earlier in the pandemic.

    "The demand just isn't there anymore," said Isaac Larian, chief executive
    of MGA Entertainment, the toy giant behind popular brands like Little
    Tikes and L.O.L. Surprise. "Sales are slowing down. Families are saying,
    'I'll take my kids to Disney this summer instead of buying more toys."

    The shipping time for toys from China to U.S. stores has ballooned from 21
    days to 159 days during the pandemic, he said.

    "All holiday toys have to ship out of China by the beginning of August,
    but that is not going to happen," Larian said. "The factories are having a tough time getting labor, prices are going up, China keeps closing
    provinces. The big picture is bad, worse than last year."

    Back in Los Angeles, Djavaheri of Yedi Houseware, says he's just beginning
    to recover from closures in southern China earlier this year, where his
    company makes electric pressure cookers. The brand - which has been
    featured in Oprah's Favorite Things list for three years in a row - is
    still struggling to make enough products to meet demand.

    "To be honest, I don't even want to be in China but it's the only option," Djavaheri said. "If there was a way to make air fryers or electric
    pressure cookers in America, I would've been there yesterday. Instead
    we're dealing with hurdle after hurdle: Inflation, logistics, it's a
    constant nightmare."

    https://news.yahoo.com/everything-halted-shanghai-shutdowns-worsening- 103816660.html

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