Shippers are being warned of the impact of China’s zero-Covid policy, which sent millions in the country into lockdown over the weekend and sparked a fresh wave of supply chain concerns.
China’s National Health Commission reported Monday 1,437 new cases in mainland China, which is roughly quadruple the number of new cases reported a week ago.
Shenzhen, Shanghai, Dongguan and Jilin province are in various states of lockdown as the 1.3-billion-strong country looks to contain the flare-up.
State media reported Chinese Vice Premier Sun Chunlan during a Saturday meeting with state officials called for strict measures to stem the latest outbreaks, including nucleic acid testing, antigen screening and quarantines.
“With lockdowns impacting both Shenzhen and Shanghai, sourcing teams should plan to go back to a situation where every order is treated as an exception case,” Brian Glick, CEO of supply chain integration platform Chain.io, told Sourcing Journal. “Close collaboration with vendors and freight forwarders is key—with passenger fights being diverted and potential airport shutdowns in play, falling back to airfreight may not be feasible. Make sure you’re clearly prioritizing your ‘hot list’ with all partners so you can make sure you get the highest priority goods out with the space you can secure.”
The Port of Shenzhen, an umbrella name given to multiple ports running along the coast, is considered one of the world’s busiest with trade routes to more than 300 ports located in more than 100 countries.
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Shenzhen, with a population of about 17.5 million, is now conducting three rounds of mandatory testing through Sunday, according to a government website. Residents were told to stay at home in an announcement Sunday that took effect immediately, while public workers were told to work from home. Public transportation has ceased. Workers selling water, electricity, fuel or other essentials are exempt from the stay-at-home order. All other businesses are closed.
Shenzhen is also home to a number of electronics manufacturing facilities, such as Apple supplier Foxconn. Reuters reported the company has shuttered some operations in response to the stay-at-home order.
Transport and logistics firm Geodis confirmed Monday the closure of its Shenzhen warehouse, with employees working from home. Truck transport continues, but there are fewer available drivers due to the shelter-in-place order. Meanwhile, because factories in Shenzhen and Dongguan have been closed, containers are not being filled or delivered to ports.
Geodis said some freight services can bypass the Shenzhen ports at Nansha or Guangzhou.
“Based on how the situation develops, the lockdown might be extended further,” Geodis warned.
Seko Logistics said Sunday its Shenzhen employees are working from home through March 20.
“As the outbreak of omicron across China worsens, local authorities are enforcing restrictions, which will have an impact on our offices, warehouses and operations,” Seko Logistics said in speaking of Shenzhen.
The Yantian Free Trade Zone will be closed through March 20, the company confirmed.
Seko, as of Sunday, said it has not received word of any restrictions at Yantian Port or Shenzhen Airport. Loaded ships will leave the port as planned, but cargo will not be loaded next week. Cargo moving between Shenzhen and Hong Kong has been stopped, with the exception of essential goods, Seko said.
Meanwhile, the logistics company said air cargo flights have so far not been impacted in Shanghai, but passenger planes are being re-routed to other cities which is likely to affect freight rates.
Orient Star Group also alerted customers to the possibility of shipment delays in the coming weeks.
CMA CGM issued notices for Shanghai and Shenzhen of bank closures affecting payments of its import and export businesses.