For the last few months, the full lockdown of Shanghai and other cities in China due to their zero Covid policy has caused turmoil for citizens and havoc for the world supply chain and financial ecosystem. It has resulted in equipment and worker shortages, as well as massive land/air/sea congestion that was already on the rise due to increased consumer demand.
In a hopeful announcement, Shanghai Deputy Mayor Zong Ming has stated, “From June 1 to mid- and late June, as long as risks of a rebound in infections are controlled, we will fully implement epidemic prevention and control, normalize management and fully restore normal production and life in the city.”
While this is great news for citizens and for a return-to-goods production, it’s also where we can expect to see congestion woes worsen, and unfortunately, just in time for peak season cargo. It is estimated that 260,000 TEU of export cargo is still sitting in Shanghai. All of the backlogged shipments are going to take time to process in conjunction with new goods hitting the supply chain snarl.
Experts at Dewry predict, “The greatest uncertainty is when China’s lockdown restrictions will end, and the ‘bullwhip’ impact this will have across the supply chain…Liner shipping schedules will also take at least one rotation to normalize. This would mean that, even if lockdowns were to end today, the predictability and capacity of the container distribution system would be jeopardized during summer peak season.”
This is not unexpected. Industry analysts warned that when China eased or eliminated its lockdown restrictions, it would present even more challenges to supply chain management. We at TOC Logistics International have been monitoring the situation closely and have been continuously working on solutions-based strategies to meet these challenges head on. If you have questions about how this will affect your business, please reach out to your representative.