Worse than Wuhan: Experts warn of Shanghai lockdown supply chain issues

Logistics experts are warning that China’s harsh lockdown on Shanghai and other manufacturing hubs will send another shock through global supply chains.

At least 373 million people have been locked down in cities contributing 40% of China’s GDP, according to a Nomura survey.

The most notable lockdown is Shanghai, China’s financial capital with 25 million residents and home to the world’s largest port. Trucks are struggling to unload cargo due to strict permit regulations and COVID testing policies, causing shipping containers to stack up.

“Even with air and ocean ports open, the length of the shutdown could make this iteration the most significant logistics disruption since the start of the pandemic,” the shipping company Freightos told clients in a statement this week.

This is another setback for the average American, whose spending power has already been crippled by record-high inflation. The U.S. also imports more goods from China than any other country in the world, roughly $435 billion worth of goods in 2020.

Reuters reports that Shanghai’s lockdown has prompted other regions to pre-emptively implement draconian measures, even with few or no cases.

And once these lockdowns end, experts foresee supply chain issues as suppliers rush to fulfill the backlog of exports.

“It’s probably worse than Wuhan. You’re going to have a lot of pent-up orders,” Jon Monroe, an ocean shipping and supply-chain expert who runs Jon Monroe Consulting, said Friday.

“The supply-chain situation in Shanghai continues to worsen. The port is running out of capacity for some types of cargo as importers cannot collect their goods,” warned Lars Jensen, CEO of Vespucci Maritime.

“With the outbreak in Guangzhou also leading to shutdowns there, the impact on export volumes out of China will grow larger.”

Europe has already been affected supply chains in Europe. A survey by the German Chamber of Commerce in China at the beginning of the month found roughly half of German companies’ logistics and supply-chain operations were “completely or severely impacted by the current COVID-19 situation in China,” according to Reuters.