China’s Spring Lockdown Spells Eventual Surge
In late March of this year China entered the strictest lockdown in the past two years due to the rising Covid-19 outbreak. Since we are unfortunately no stranger to the ripple effects this has globally, companies here in the U.S. saw the writing on the wall and have since been dealing with yet another bout of supply chain issues, primarily lack of freight due to shipping delays and a shortage of resources. As we enter into the second half of the year though, those in the transportation and shipping industry are beginning to become optimistic.
China recommencing lockdown
Earlier this year reports of an uptick in Covid cases started coming out of Shanghai, which led into the harshest lockdown that China has implemented since the beginning of Covid. China’s “zero-COVID” strategy calls for shutdowns for non-essential businesses and residents to stay inside their homes with no contact with the outside world. The severity of the lockdowns vary with each lockdown China has had since the beginning but there is no getting around that this would impact everyone worldwide.
“With China’s economic growth already slowing, the extreme measures are seen as worsening difficulties hitting employment, consumption, and even global supply chains.”
This continues to slow down trucking to the point of carriers not having enough freight to move, resulting in less profit, which in turn hurts the smaller carriers that cannot afford to keep operating forcing them to lay off workers in some cases.
Up-down-up-down
This slow down, pick-up, no freight to surplus of freight has become an almost norm. Due to shutdowns and shortages overseas, this has created a pattern that has a delayed effect. Though the shutdown ends in June, it will take time for logistics to catch up. Nearly 30% of empty containers that the U.S. relies on comes from China and if you are connected to the intermodal world there is no doubt you or your company have directly been affected this year.
“China’s ‘zero Covid’ measures on trucking and cross-city transport limitations continue to slow down manufacturing and logistics. The decrease in completed manufactured goods is reflected in the decrease in exports leaving Shanghai bound for the United States”
As we are going to be getting a surplus of delayed freight coming our way, companies will scramble, more than they already were, to find drivers and employees to keep up with the demand. What used to be a normal, seasonal uptick in the spring months will become an upswing in the summer months resulting from bottle necks in the Asia-pacific area breaking open. Unfortunately, as we have seen in the past this will also create a separate bottle neck issue at the ports, especially on the west coast. This will cause a domino effect that will be felt more immediate here in the U.S. – if we are not already feeling it. We can expect to feel the affects of this particular shut down till the end of the year at minimum.
What can we make of this?
No one can control the next outbreak, the next shortage, the next break in supply chain or even the inflation that continues to batter into the economy. With such volatile markets and fluctuating forecasts, if anything has come from this, it is the need for the shipping and logistics world to become adaptable and find ways to improve procedures, staffing practices and operations to ease unpredictable discourse in the future. We can assume that things will even out and one day we will be back to some level of normalcy, but as history proves, we cannot always count on things going back to the way they were.
With nearly 40 years in the business and lanes nationwide, we can give your business the kick it needs to curb supply chain woes. Call us at (866) 736-5233
