China supply chains hit as lockdowns are rolled out

Supply chain and logistic operations out of China face further pressure over the coming weeks as a series of new lockdown measures have been put in place in Shanghai and Shenzhen.

Shenzhen – a city of 17.5m people with a large manufacturing base – has gone into lockdown for at least seven days forcing several companies to pause manufacturing activities in the city as China deals with its worst outbreak since 2020.

Foxconn – which manufactures products for Apple and Samsung – is the most high profile company that will be affected as the city has told non-essential businesses to close, while public transport is shutdown and people are urged to work from home.

Many other manufacturers will also be hit by the restrictions.

On the transport front, the city is also home to several shipping ports, including Yantian, one of the largest container terminals in China.

Restrictions are also being put in place in other cities. Shanghai Pudong Airport has diverted more than 100 international flights, which will put pressure on bellyhold operations.

A statement from the Civil Aviation Administration of China (CAAC) on March 15 said the move, which takes effect March 21 through July, will affect 106 flights operated by five airlines — Air China, China Eastern Airlines, Shanghai Airlines, Juneyao Airlines, and Spring Airlines.

The measures are not expected to affect freighter operations.

The move is designed to ease the pressure on Shanghai’s Covid management measures.

Freight forwarder reaction

Freight forwarder Westbound Logistics Services said that the ports of Yantian, Shanghai and Shenzhen will be subject to “major disruption” during the next week or more.

Seko Logistics said: “No cargo will be able to load in Yantian from next week and vessels most likely will omit the port.

“We have not yet been advised of any official restrictions to Shenzhen Airport, however staff are unable to leave their homes to work at the airport.

“Trucks from outside Shenzhen are unable to enter the city. Cross border shipments from Shenzhen to Hong Kong will not move, unless they carry essential goods to Hong Kong.”

On Shanghai, it added: “As the outbreak in Shanghai continues to worsen, citizens have been encouraged not to leave the city unless necessary and must take a nucleic acid test to enter or leave.

“Areas of Shanghai are being locked down but there is no full citywide lockdown implemented yet, however as the situation continues to worsen this may come into effect in the coming weeks.

“[International] passenger flights into Shanghai have been diverted to other cities.  Currently cargo aircraft has not been affected, however the diversion of passenger aircraft will have an impact on airfreight rates.”

Norman Global Logistics said that trucking to and from Hong Kong also continues to face delays due to stricter travel requirements. This has resulted in the use of shipping to move goods to and from Hong Kong.

For Shenzhen Airport, the company said that ground handling and cargo receiving are affected as drivers need to be tested within 24 hours before delivery and terminals can only receive the goods a maximum of 48 hours before departure.

“The measures will limit the capacity for cargo handling,” Normal Global Logistics said.

Capacity out of Hong Kong also continues to be constrained as home carrier Cathay Pacific has massively reduced its long-haul freighter operations due to air crew quarantine requirements.

Cathay focuses on regional freighter flights as long-haul remains constrained