Lockdowns in China Block Truck Shipments and Close Factories
By Keith Bradsher, April 8, 2022, NY Times
“The problem is not ships — it’s that there’s no cargo coming
because there are no trucks,” said Jarrod Ward, the chief East Asia
business development officer in the Shanghai office of Yusen Logistics,
a large Japanese supply chain management company.
The testing of truck drivers has been held up because some cities
are doing mass testing of residents. Shanghai tested essentially
all 25 million people within its borders in a single day on Monday
and detected another 21,000 cases on Thursday.
Now, there is an acute shortage of truck drivers in Shanghai and
in nearby cities like Kunshan, a center of electronics production.
Many electronics components manufacturers are shutting down in Kunshan.
“The key electronics suppliers to Apple, to Tesla, they’re all based there,” said Julie Gerdeman, the chief executive of Everstream, a supply chain risk management affiliate of DHL that is based in San Marcos, Calif. Apple declined to comment, and Tesla had no immediate reply 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
floor for as long as four weeks in some cities in northeastern China. Companies have been storing goods in nearby warehouses while waiting
for normal truck traffic to resume.
But as lockdowns stretch 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 car seat producers had run out of
components. Volkswagen said it had closed a factory outside Shanghai.
While Shanghai’s cases increase, its main rival in electronics manufacturing, Shenzhen, has emerged from lockdown. That is freeing
workers and factories there to resume full-speed production.
Retailers and manufacturers in the West tried to adapt to previous
supply chain difficulties in China by switching from ships to airfreight,
but airfreight rates have more than doubled from last year.
The near-total suspension of passenger flights in and out of Shanghai
has roughly halved the airfreight capacity there, said Zvi Schreiber,
the chief executive of Freightos, a freight booking platform. The war
in Ukraine has forced many airlines to schedule longer flights around
Russia and Ukraine, which means each plane can make fewer trips in a
week and often can carry less weight on each flight.
The war in Ukraine is also starting to hurt the availability of
Soviet-era Antonov freighters, Mr. Schreiber said. These workhorses
of the airfreight industry have been kept going in recent years almost entirely by Ukrainian maintenance bases that are now closed.
For companies, any additional disruptions to the global supply chain
would come at a particularly fraught moment, on top of rising prices
for raw materials and shipping, along with extended delivery times and
worker shortages.
https://www.nytimes.com/2022/04/08/business/china-lockdowns-supply-chain.html
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