China’s brutal lockdown of Shanghai is worsening global supply chains as the city’s port clogs up – threatening to cause delays and shortages while also driving up prices in Britain, retailers have warned.
The city – which is home to the world’s largest container port – has now been in strict lockdown since late March, causing huge backlogs to build up with hundreds of cargo vessels stranded offshore.
Nick Glynne, CEO of the UK’s Buy It Direct group, told the BBC today that this is exacerbating problems with supply chains that have not resolved since last year – affecting products as varied as barbecues and fridges.
Meanwhile, the people of Shanghai continue to suffer with video appearing to show bags of cats left on the streets amid claims the animals are due to be culled because their owners tested positive for Covid.
China is continuing to pursue a strict ‘zero-Covid’ approach to the pandemic, even in the fact of the more-infectious Omicron variant, with experts warning the chaos and misery could continue for months.
Cats have been pictured crammed into sacks on the streets of Shanghai, amid claims they are due to be culled because their owners caught Covid
Shanghai is reportedly culling cats of people who catch Covid, after Hong Kong killed hamsters at a store where the staff got infected earlier this year
BBVA, a Spanish financial services firm, has warned the disruption could last until June. Others predict it could take even longer for the outbreak to fall back to the level where Beijing will consider reopening the city.
The problems strict measures are causing are plain to see: Ship tracking data shows hundreds of vessels – most of them carrying cargo – loitering off the coast of Shanghai waiting to drop off or pick up shipments.
Data released by Bloomberg a week ago showed there were 477 cargo ships in the queue. That figure is likely to be higher now.
Mr Glynne said that is causing major problems for retailers who are facing months of delays to get their products shipped, extra costs in finding alternative routes, or a toxic combination of both.
‘Pre-Covid, there was around a six month lead time. If we wanted to order a barbecue for the summer, we would order it by November, he said.
‘Now, we’re having to order barbecues this year for next summer. And it is impossible to do so… demand is all over the place.
‘Our landed prices are also significantly higher than pre-Covid, which is to do with supply chain issues and also the exorbitant cost of shipping out of China and the far east at the moment.
He continued: ‘If you look at a large American fridge-freezer, that we bring in over from China. Pre-Covid that cost £12 to ship, door to door, from a factory in northern China to the UK with a six-month lead time.
‘Now we’re looking at 12 to 14 months lead time and the price of freight alone has gone up to £80. So a £299 fridge has now got a £70 additional cost which has a knock-on effect to the consumer.’
Shanghai’s lockdown is also causing a huge buildup of container ships (in green) offshore, which retailers warn will cause shortages and price rises
The backlogs are being caused by multiple factors. As part of Shanghai’s lockdown, the port is running at reduced capacity meaning it can process fewer ships.
But truckers are also experiencing problems because of passes required to cross a myriad of lockdown zones in the city – meaning that even if ships are available to take the cargo, businesses are struggling to get the cargo to the port.
China is trying to resolve some of the issues. Beijing last week created a ‘white list’ of 666 firms that have been prioritised to reopen under strict health regulations.
These include Tesla, Volkswagen and its Chinese partner SAIC Motor, as well as semiconductor and medical firms.
To prepare for the restart, Tesla has recalled workers to its Shanghai plant where they will need to live on site, in line with China’s “closed loop management” process, two sources said.
SAIC Motor said it would start conducting stress tests on Monday on its own production resumption plans, while Volkswagen said it was evaluating the feasibility of resuming production at its joint venture with SAIC.
The city aims to stop spread of COVID-19 outside quarantined areas by Wednesday, Reuters cited sources as saying on Sunday, an ambitious target that would allow further easing of its lockdown.
It is stepping up testing and the transfer of positive cases and their close contacts to isolation centres to meet that goal.
Shanghai’s lockdown and wider China curbs are taking a toll on the world’s No.2 economy during a key year for President Xi Jinping, who is expected to secure a third leadership term in the autumn.
Shanghai has been in lockdown since late March as authorities impose strict ‘zero Covid’ curbs on the city in the fact of a massive wave of Omicron cases
Beijing has ordered Shanghai to undergo several rounds of mass testing while confining residents to their homes until the outbreak dies out
Data for March released on Monday showed that consumption and employment suffered because of COVID curbs, with economists predicting a worsening overall economic outlook.
Shanghai is under pressure to deliver on China’s COVID-19 elimination strategy, which is being increasingly challenged by the highly infectious Omicron variant.
While the city has not given a timeline for how it will further ease restrictions after ending community spread outside quarantined areas, authorities have said reaching such a state is essential to ending movement curbs.
Last month, the city of Shenzhen reopened public transport and allowed businesses get back to work shortly after reaching a similar status.
But Jin Dongyan, a virologist at the University of Hong Kong, said it would be difficult for Shanghai to make sure by Wednesday that nobody outside centralised quarantined facilities in the city is free of COVID, given that the virus can spread faster than Shanghai can identify infections using PCR tests.
Shanghai on Monday announced a new round of daily PCR and antigen tests for residents in “sealed” and “controlled” areas from Monday to Thursday, urging cooperation.
Several residents have said that they and their neighbours have collectively refused to join queues for PCR tests, some out of weariness after multiple rounds and others out of fear of catching COVID while gathering for tests.
“We hope that the majority of our citizens will continue to cooperate as always … and achieve the goal of zero-COVID at community level as soon as possible, and allow normal production and life to resume,” Shanghai health official Wu Qianyu said.
Of 21,395 new local infections Shanghai reported for Sunday, 561 were found outside quarantine areas, down from 722 on Saturday, the third consecutive decline.
Shanghai also reported that three people infected with COVID-19 died on Sunday, the first time during the current outbreak that it reported deaths among coronavirus patients, all of them elderly and with underlying health conditions.
However, numerous Shanghai residents have said that a family member had died after contracting COVID-19 during the current outbreak, but that the cases had not been included in official statistics, fuelling suspicion about the accuracy of data.
On Sunday, Shanghai officials revealed that as of April 15, only 62% of residents over 60 had been fully vaccinated, and only 38% had taken a booster jab. China has said that sticking to a “dynamic clearance” strategy is essential to protecting its elderly.
Shanghai has carried out more than 200 million PCR tests since March 10.
***
Read more at DailyMail.co.uk