The entire city of Shanghai eventually went into lockdown, with no way in or out. An initial one-week-long lockdown was prolonged into May because of an increase in covid-19 cases. We’re now ten weeks into it, and China’s covid restrictions are wreaking havoc on the American economy and supply chain once more. Furthermore, China’s economy would grind to a standstill.
Covid is here to stay for the foreseeable future. Although, Shanghai has begun to lift their restrictions and logistics has begun to improve, we are still a long way from getting back to normal.
Lockdowns Ripple Effects
1 Logistic delays from China have quadrupled since the most recent lockdowns
2 Truck drivers found it hard to reach ports due to travel restrictions
3 Factories deal with raw material, component shortages and labor shortages
4 Container backlogs and chassis shortages continue to be an issue
5 Global inflation is increasing
6 Shipping costs could continue to rise
Ships and containers jam the ports
On May 17th, there were 185 ships stranded at Shanghai’s port (the world’s largest maritime port); currently, just over a week later, there are 130 ships stranded in Shanghai’s port. The bottleneck transfers to US ports as the backlog begins to decrease. Berth times and wait times for containers to be carried to the railways have increased at the ports of Los Angeles and Vancouver. Consider it a massive bull whip.
Small changes in the bull whip result in larger fluctuations towards the finish. This is the present state of our supply chain. As a result, additional delays and higher price are expected.
Mechanical Power is here to take care of these worldwide sourcing difficulties for you, so you don’t have to. Contact us to learn how we can reduce the cost and improve product quality with our hassle-free global sourcing strategy.