Another China lockdown jeopardizes electronics, auto supply chains

A five-day lockdown to contain the spread of COVID in the Chinese city of Kunshan, an important production center for electronics components, could severely squeeze the supply of laptops, mobile phones, TVs and automobiles, according to industry and media reports from the region.

Meanwhile, factory and logistics activity in Shanghai has been slashed further with the entire population of 25 million sheltering in place after authorities indefinitely extended a quarantine mandate that was supposed to end Tuesday morning. Officials are trying to test everyone in Shanghai amid a record outbreak of nearly 13,000 cases as President Xi Jinping continues to insist on a “zero-COVID” policy that is wearing out many residents and businesses.

The protracted, spreading confinement measures are likely to cause supply chain disruptions far greater than last year’s partial closures of the ports of Yantian and Ningbo due to limited outbreaks and more on par with the manufacturing blackout that began in Wuhan at the start of the pandemic two years ago, said ocean shipping expert Jon Monroe. 

Monroe, who heads an eponymous supply chain consulting firm, and other analysts warn that U.S. and European ports are likely to experience a lull in inbound cargo, followed by a huge surge that exacerbates existing congestion.

“It’s probably worse than Wuhan,” he told FreightWaves. “You’re going to have a lot of pent-up orders. It’s going to be an overwhelming movement of goods” that will swamp ocean shipping lines and ports once the lockdowns are lifted, jacking up freight rates even more.

A flash survey of 167 member companies posted Friday by the American Chamber of Commerce in China showed the impact of the COVID-19 measures on businesses. Among manufacturers, 82% reported slowed or reduced production and 86% said their supply chains had been disrupted.