About 500 container vessels are currently stuck in congestion outside China’s ports as the “Zero-Covid” policy initiated by President Xi Jinping wreaks havoc on worldwide trade. Per reports from The Telegraph, UK, repeated stringent restrictions designed to stamp out the highly contagious omicron have resulted in shortages of staff. Unloading vessels in the port city and the absence of lorry drivers who may have helped transport goods from and to the ships have become a problem.
Chinese cities, including Shanghai, are following strict lockdowns to lower infection rates under control, while Hong Kong’s rising death rate has shown the risk the virus poses with low vaccination rates, especially among older people. Data from Bloomberg indicates that 477 ships are waiting off the coast, adding to the queues all over the world, which have also blighted the consumer goods supply, building materials, and factory supplies since the ongoing pandemic struck.
Johanna Chua, an economist associated with Citi, mentioned that there are risks of supply chain issues spreading across the country as well as internationally. This is because Shanghai is one of the major exporters of China’s electronics and vehicle exports, which is especially essential for manufacturers based in Taiwan, Vietnam, South Korea, and Japan.
She added that while the port of Shanghai has stayed operational 24 hours every day, inside a closed-loop bubble that needs employees to stay at the site, there are multiple reports of blocked land traffic, trucking difficulties, and even closures of warehouses resulting in logistic bottlenecks and increasing costs.
This is having a somewhat spillover impact on the logistics of provinces like Jiangsu and Zhejiang, big manufacturing centers, which account for 29pc of the total exports in China.
These are having impacts globally. Sanjay Raja, an economist associated with Deutsche Bank, says that inflation in the UK is likely to rise above 8pc in part due to major global supply issues.
We are witnessing a strong cocktail of inflationary pressures from April, as energy bills are on the rise, food pressures continue to rise and be elevated, and pressures from core goods continue to encounter supply chain challenges.
It comes after data shared by Ocean Network Express reflected about 10pc of container vessels worldwide remain stuck in congestion, resulting in more bottlenecks in global supply chains.