Supply chains around the world are feeling the knock-on effects of China’s COVID-19 policies. Procter & Gamble and Tesla factories in the country have been closed since March. General Electric has been experiencing significant production and delivery disruptions. About half of Honeywell International’s 20 manufacturing facilities are still not fully operational. And Apple expects about $8 billion in lost sales this quarter because of both the lockdowns and the persistent semiconductor shortage.
While affected companies hope the impacts will be relatively short-lived, many industry experts anticipate the ripple effects will last for months. A study by analysts at the Royal Bank of Canada found that one-fifth of the global container ship fleet is stuck at various ports. Ships waiting to enter the Port of Shanghai tally nearly 350, a 34% increase over the past month. Shipping from a warehouse in China to one in the United States is taking 74 days longer than usual. In the EU, late ships from China are spurring a shortage of containers to carry European exports.
Analysts caution that there’s only so much disruption supply chain organizations will endure before switching to other approaches. The Wall Street Journal notes that most developed countries have focused on a COVID-19 containment strategy of minimizing infections and managing waves while keeping businesses and daily life running. But as a supplier to the world, China’s zero-COVID policy is out of balance. And it’s anyone’s guess when community transmission will reach zero, as the rate still hovers around 50 cases a day. Meanwhile, Beijing, which has a less-strict lockdown, expanded its COVID-19 restrictions this week by shutting down public transportation routes as well as many public venues. Zhengzhou announced work-from-home guidance and other COVID-restrictions.
When the lockdowns started in March, officials hoped to reopen by late April. Now in the first week of May — with no clear end in sight to the zero-COVID policy — companies are evaluating how to manage or shift their supply chains out of China.
Prepare for what’s next
In today’s complex and constantly shifting geopolitical landscape, supply chain professionals need to frequently update their strategies to keep pace with — or better yet, stay ahead of — the next supply chain disruption. More often than not these days, it feels like we are standing on unknown ground.
ASCM has a variety of webinars to help you navigate this new territory with creative strategies and innovative thought leadership. Upcoming presentations explore process innovation, being a customer of choice, shifting strategy to execution, excellence in leadership, behavioral economics and more. Some of these webinars are excusive ASCM member benefits, so be sure to join or renew your membership today so you don’t miss these important educational opportunities.
