Even companies in China whose factories operate under so-called closed-loop systems may be forced to stop work due to parts shortages or logistical problems that make it almost impossible to move people and goods across the country. warned a European chamber of commerce.
“A few businesses are currently operating in a closed loop. These businesses are facing challenges and may close very soon due to lack of logistics and manpower,” said Maximilian Butek, chief representative of the delegation. German industry and commerce in Shanghai. in a LinkedIn post last week. “Their workers for closed-loop production have been working for over three weeks and need to be replaced.”
Butek added that most members of his association cannot “operate the production sites because they cannot have the raw materials delivered and cannot deliver their products to their customers. The logistics in Shanghai are not working”. .
Officials in China’s financial hub have encouraged companies to restart production that has been halted due to the city’s strict covid-19 lockdowns using closed-loop systems in which workers live on-site in their factories. While some, like Tesla and Quanta Computer, which make laptops for Apple, have restarted operations, the experience has not been smooth.
Tesla only has inventory for just over two weeks based on its new closed-loop schedule, a person familiar with the matter said, while workers locked in the Volkswagen factory in Shanghai do not have an adequate supply of auto parts needed to manufacture cars.
Cargo deliveries at Shanghai Pudong International Airport, meanwhile, are increasingly disrupted, according to Dimerco Express Corp, a Taipei-based air and sea freight forwarder and logistics specialist.
Kathy Liu, Dimerco’s director of global sales and marketing, said before the city’s lockdown, around 1,000 shipments could arrive per day and around 80% would be picked up by truck. But because there aren’t enough trucks to pick up the goods, that pick-up rate has dropped to just 10%.
“There are more and more shipments piling up at the freight forwarders’ warehouse or bonded warehouse,” Liu said.
The problem remains inter-provincial road transport and the various restrictions and sanitary requirements imposed locally, which forces truckers to manage a range of policies.
Earlier this month, the central government ordered highways to remain open and unobstructed. The Ministry of Transport has ordered that no covid test checkpoints be set up so that the main lanes of the motorways remain smooth. Other logistical problems still exist, causing delays, according to Dimerco.
“A lot of truckers see the potential risk, so they’re not willing to take orders for those routes,” Liu said. “It’s a very difficult time not only for us, but also for those like couriers or online e-commerce businesses.”
Information for this article was provided by James Mayger of Bloomberg News.
– – –