China is still trying to enforce its zero covid policy, to the detriment of the economy. Many factories are closing, to limit the spread of Covid-19 and to comply with containment measures. Logistics operators and exporters face great difficulties. These repeated confinements undermine the global supply chain.
A nightmare for logistics professionals
For the past month, truck traffic in China fell 40%. Around Shanghai, it’s even worse (except for the environment of course), truck movements are only 15% of their usual level. Several parts of the city have been placed under bell jars to prevent the virus from spreading. The government is not changing course and is trying at all costs to impose a zero covid policy, too bad for the economy. It’s a real nightmare for logistics professionals who relive the same situation as in 2020, at the time of the first wave.
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Chinese exporters are desperate to get their goods to ports and across borders. Liu Sanhong, an executive at Haiwei Logistics responsible for handling shipments of made-in-China products from the coastal province of Shandong to the rest of the world, said his days had never been better. “difficult and unpredictable”. He says he recently sent a truck to deliver goods from Linyi City to Qingdao Port, a journey that normally takes four hours on the highway. This time the journey took two days and driver missed ship departure.
Shanghai lockdown puts global electronics under pressure
At the start of 2022, the Xi’an lockdown was already threatening global production of RAM and flash memory around the world. This large city of 13 million inhabitants, the former capital of China, is home to the factories of Samsung and Micron. Both produce a large part of their modules. A month ago, the city of Shenzhen was also confined because local authorities had found new epidemic outbreaks. A situation which suggested that other large cities could again be affected by the Covid-19. At the time, Apple’s production had already been heavily impacted.
Today, it is the immense city of Shanghai, with its 25 million inhabitants, which is placed under a bell. A situation that puts global electronics under pressure. Dozens of subcontractors and component manufacturers had to close their factories in the megalopolis and the neighboring city of Kunshan, both confined by authorities in hopes of ending the country’s worst outbreak in two years. On Wednesday April 13, 2022, the Taiwanese Pegatron, which assembles certain iPhone models for Apple, interrupted production at its two local subsidiaries.