Supply Chain Woes Could Worsen as China Imposes New COVID Lockdowns

1/18/2022 12:11:00 AM

Analysts warn that many industries could face disruptions in the flow of goods as China tries to stamp out any coronavirus infections before the Winter Olympics, which will be held in Beijing next month.

Supply Chain, China

Analysts warn that many industries could face disruptions in the flow of goods as China tries to stamp out any coronavirus infections before the Winter Olympics, which will be held in Beijing next month.

WASHINGTON — Companies are bracing for another round of potentially debilitating supply chain disruptions as China , home to about one-third of global manufacturing, imposes sweeping lockdowns in an attempt to keep the omicron variant at bay. The measures have already confined tens of millions of people to their homes in several Chinese cities and contributed to a suspension of connecting flights through Hong Kong from much of the world for the next month. At least 20 million people, or about 1.5

January 17, 2022, 8:15 PMWASHINGTON — Companies are bracing for another round of potentially debilitating supply chain disruptions as China, home to about one-third of global manufacturing, imposes sweeping lockdowns in an attempt to keep the omicron variant at bay.

Sign up for The Morning newsletter from the New York TimesStory continues“Will the Chinese be able to control it or not I think is a really important question,” said Craig Allen, president of the U.S.-China Business Council. “If they’re going to have to begin closing down port cities, you’re going to have additional supply chain disruptions.”

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Here’s an idea. Maybe the US should stop exploiting cheap labor for cheap goods from China and start making their own crap at home and employing people in the US. Two problems solved. JoeBiden KamalaHarris (Waits for Biden to get blamed...).

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Read full article This aerial photo taken on June 22, 2021 shows a view of Yantian port in Shenzhen in China's southern Guangdong province.1 hour EST: 11:00 a..l leader and comments from the National Bureau of Statistics (NBS), as well as the People’s Bank of China (PBOC) rate cut, hint at further easy money policies.

- A backlog at Yantian port - China's largest container terminal - caused by a Covid-19 outbreak among port workers will take several weeks to clear, the world's biggest shipping firm said on June 21. - China OUT (Photo by STR / AFP) / China OUT / The erroneous mention[s] appearing in the metadata of this photo by STR has been modified in AFP systems in the following manner: [June 22] instead of [June 21]. | GMT: 16:00 Supply chains drew less-than-flattering headlines in the waning months of 2021. Please immediately remove the erroneous mention[s] from all your online services and delete it (them) from your servers. If you have been authorized by AFP to distribute it (them) to third parties, please ensure that the same actions are carried out by them. Supply chains were targeted as potential triggers for global economic disaster or as the Grinch that stole Christmas. Failure to promptly comply with these instructions will entail liability on your part for any continued or post notification usage. That said, Australia’s ASX 200 prints 0.

Therefore we thank you very much for all your attention and prompt action. Discussion Topics: Break down the causes of the 2021 global supply chain problems Determine immediate steps supply chain leaders must take in 2022 Establish a longer-term strategy for mitigating major supply chain issues Return to this web page to watch the webinar. We are sorry for the inconvenience this notification may cause and remain at your disposal for any further information you may require. - China OUT (Photo by STR/AFP via Getty Images) Ana Swanson and Keith Bradsher January 17, 2022, 8:15 PM · 9 min read WASHINGTON — Companies are bracing for another round of potentially debilitating supply chain disruptions as China, home to about one-third of global manufacturing, imposes sweeping lockdowns in an attempt to keep the omicron variant at bay. Hosted by. The measures have already confined tens of millions of people to their homes in several Chinese cities and contributed to a suspension of connecting flights through Hong Kong from much of the world for the next month. At least 20 million people, or about 1.85% before the China Q4 GDP rallied to 4.

5% of China’s population, are in lockdown, mostly in the city of Xi’an in western China and in Henan province in north-central China. The country’s zero-tolerance policy has manufacturers — already on edge from spending the past two years dealing with crippling supply chain woes — worried about another round of shutdowns at Chinese factories and ports. Additional disruptions to the global supply chain would come at a particularly fraught moment for companies, which are struggling with rising prices for raw materials and shipping along with extended delivery times and worker shortages. Sign up for The Morning newsletter from the New York Times China used lockdowns, contact tracing and quarantines to halt the spread of the coronavirus nearly two years ago after its initial emergence in Wuhan. These tactics have been highly effective, but the extreme transmissibility of the omicron variant poses the biggest test yet of China’s system. Talking about the virus, China’s Beijing tightens the rule for entry into the capital city after a jump in the covid cases while Japan also discusses heightened virus-led restrictions for Tokyo on witnessing more than 20,000 daily infections for the third consecutive day.

So far, the effects of the lockdowns on Chinese factory production and deliveries have been limited. Four of China’s largest port cities — Shanghai, Dalian, Tianjin and Shenzhen — have imposed narrowly targeted lockdowns to try to control small outbreaks of the omicron variant. As of this past weekend, these cities had not locked down their docks. Still, Volkswagen and Toyota announced last week that they would temporarily suspend operations in Tianjin because of lockdowns. Story continues Analysts warn that many industries could face disruptions in the flow of goods as China tries to stamp out any coronavirus infections before the Winter Olympics, which will be held in Beijing next month. On a broader front, S&P 500 Futures prints 0.

On Saturday, Beijing officials reported the city’s first case of the omicron variant, prompting authorities to lock down the infected person’s residential compound and workplace. If extensive lockdowns become more widespread in China, their effects on supply chains could be felt across the United States. Major new disruptions could depress consumer confidence and exacerbate inflation, which is already at a 40-year high, posing challenges for the Biden administration and the Federal Reserve. “Will the Chinese be able to control it or not I think is a really important question,” said Craig Allen, president of the U.S. However, major attention will be given to the virus updates and Fed rate hike concerns.

-China Business Council. “If they’re going to have to begin closing down port cities, you’re going to have additional supply chain disruptions.” The potential for setbacks comes just as many companies had hoped they were about to see some easing of the bottlenecks that have clogged global supply chains since the pandemic began. The combination of intermittent shutdowns at factories, ports and warehouses around the world and American consumers’ surging demand for foreign goods has thrown the global delivery system out of whack. Transportation costs have skyrocketed, and ports and warehouses have experienced pileups of products waiting to be shipped or driven elsewhere while other parts of the supply chain are stymied by shortages. It also does not guarantee that this information is of a timely nature.

For the 2021 holiday season, customers largely circumvented those challenges by ordering early. High shipping prices began to ease after the holiday rush, and some analysts speculated that next month’s Lunar New Year, when many Chinese factories will idle, might be a moment for ports, warehouses and trucking companies to catch up on moving backlogged orders and allow global supply chains to return to normal. But the spread of the omicron variant is foiling hopes for a fast recovery, highlighting not only how much America depends on Chinese goods, but also how fragile the supply chain remains within the United States. American trucking companies and warehouses, already short of workers, are losing more of their employees to sickness and quarantines. Weather disruptions are leading to empty shelves in American supermarkets. If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned.

Delivery times for products shipped from Chinese factories to the West Coast of the United States are as long as ever — stretching to a record high of 113 days in early January, according to Flexport, a logistics firm. That was up from fewer than 50 days at the beginning of 2019. The Biden administration has undertaken a series of moves to try to alleviate bottlenecks both in the United States and abroad, including devoting $17 billion to improving American ports as part of the new infrastructure law. Major U.S. Errors and omissions excepted.

ports are handling more cargo than ever before and working through their backlog of containers — in part because ports have threatened additional fees for containers that sit too long in their yards. Yet those greater efficiencies have been undercut by continuing problems at other stages of the supply chain, including a shortage of truckers and warehouse workers to move the goods to their final destination. A push to make the Port of Los Angeles operate 24/7, which was the centerpiece of the Biden administration’s efforts to address supply chain issues this fall, has still seen few trucks showing up for overnight pickups, according to port officials, and cargo ships are still waiting for weeks outside West Coast ports for their turn for a berth to dock in. West Coast ports could see further disruptions this year as they renegotiate a labor contract for more than 22,000 dockworkers that expires on July 1. Previous negotiations led to work slowdowns and shipping delays.

“If you have four closed doors to get through and one of them opens up, that doesn’t necessarily mean quick passage,” said Phil Levy, chief economist at Flexport. “We should not delude ourselves that if our ports become 10% more efficient, we’ve solved the whole problem.” Chris Netram, managing vice president for tax and domestic economic policy at the National Association of Manufacturers, which represents 14,000 companies, said that American businesses had seen a succession of supply chain problems since the beginning of the pandemic. “Right now, we are at the tail end of one flavor of those challenges: the port snarls,” he said, adding that Chinese lockdowns could be “the next flavor of this.” Manufacturers are watching carefully to see whether more factories and ports in China might be forced to shutter if omicron spreads in the coming weeks.

Neither Xi’an nor Henan province, the site of China’s most expansive lockdowns, has an economy heavily reliant on exports, although Xi’an does produce some semiconductors, including for Samsung and Micron Technology, as well as commercial aircraft components. Handel Jones, CEO of International Business Strategies, a chip consultancy, said the impact on Samsung and Micron would be limited, but he expressed worries about the potential for broader lockdowns in cities like Tianjin or Shanghai. “What we’re concerned with now is, is Xi’an a template for other cities in China?” he asked. “If they can’t control it in the next two or three weeks, then I think you could have a significant impact on the supply chain. Right now, it’s kind of the tipping point.

” Chinese authorities are experimenting with more narrowly targeted lockdowns. One example is in Shanghai, which announced Thursday that it had identified five COVID cases at a milk tea shop that had been visited by a Chinese student who had recently returned from the United States. Rather than lock down the entire city or neighborhood, the government put emergency restrictions on the shop itself. Tim Huxley, chair of Mandarin Shipping, a Hong Kong-based container shipping line, said that social distancing rules, elaborate testing and other precautions had slightly reduced the efficiency of Chinese ports. But after considerable disruptions during lockdowns last year, Chinese docks have proved increasingly able to continue operating through municipal lockdowns.

To forestall infections, they have barred ship crews from coming ashore and have required some dock workers to live for many weeks at a time in nearby dormitories instead of going home to their families at night. China plans similar arrangements to keep athletes and other foreigners completely separate from its population during the Winter Olympics next month. Beijing traffic authorities have even told residents to stay away from any vehicle collisions involving Olympic participants, to avoid infection. Last year, terminal shutdowns in and around Ningbo and Shenzhen, respectively the world’s third- and fourth-largest container ports by volume, led to congestion and delays, and caused some ships to reroute to other ports. But if the coronavirus does manage to enter a big port again, the effects could quickly be felt in the United States.

“If one of the big container terminals goes into lockdown,” Huxley said, “it doesn’t take long for a big backlog to develop.” Airfreight could also become more expensive and harder to obtain in the coming weeks as China has canceled dozens of flights to clamp down on another potential vector of infection. That could especially affect consumer electronics companies, which tend to ship high-value goods by air. For American companies, the prospect of further supply chain troubles means there may be another scramble to secure Chinese-made products before potential closures. Lisa Williams, CEO of the World of EPI, a company that makes multicultural dolls, said the supply chain issues were putting pressure on companies like hers to get products on the shelves faster than ever, with retailers asking for goods for the fall to be shipped as early as May.

Williams, who was an academic specializing in logistics before she started her company, said an increase in the price of petroleum and other raw materials had pushed up the cost of the materials her company uses to make dolls, including plastic accessories, fibers for hair, fabrics for clothing and plastic for the dolls themselves. Her company has turned to far more expensive airfreight to get some shipments to the United States faster, further cutting into the firm’s margins. “Everything is being moved up because everyone is anticipating the delay with supply chains,” she said. “So that compresses everything. It compresses the creativity, it compresses the amount of time we have to think through innovations we want to do.

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