10/05/2022

How does the Shanghai lockdown affect exports?

In recent weeks, concern about the Shanghai lockdown has been growing. Especially, the export industry has been affected globally. As a result of the Covid-19 outbreak, the Chinese city has been in lockdown once again for over a month. Do you want to know how this can affect your company?

Covid situation in Shanghai

Since March 28, Shanghai has been closed due to a new outbreak of Covid-19. The closure of the economic capital of China has generated numerous consequences in all areas, but especially in the economic one.

In this context, the government opted for a "covid zero" strategy. What does it mean? It is an ironclad anti-Covid policy that tightens restrictions with numerous perimeter closures and home quarantines.

This set of measures represents an economic slowdown that is difficult to face. Ports, terminals, loading and unloading centers, customs, etc., have been paralyzed, with a great impact on the supply chain.

Impact of the Shanghai lockdown on the supply chain

Considered one of the most important cargo ports, Shanghai currently operates at only 25%. The most affected sectors by this situation are textile, electronic components and solar panels.

There is talk of a collapse in maritime transport, but not just because it cannot operate. The main reason is the restriction of land access to the port. And while the carriage of goods by road is operating at 25% of its capacity, many of the stocks do not reach the docks, causing more than 500 ships to accumulate at the entrance of the port and in the canals, waiting to receive their cargo.

However, the forecasts are favorable and predict that little by little there will be a reopening in the Chinese city. In this way, Shanghai tries to recover normality in its production centers. Consequently, the export and commercial activity would gradually resume.

Latin America is the most affected region by the problems in China. The south of the American continent imports numerous Chinese products from practically all productive sectors. In Spain, many companies are already noticing the effects of the break in Shanghai on their exports. At the moment, there is no shortage of raw materials or components, although the economic landscape awaits the possible opening or relaxation of anti-Covid measures.

Covid and disruptions in Chinese supply chains

As a result of the perimeter closure of Shanghai, China has been placed on alert for coronavirus. Dozens of cities have implemented partial or total lockdowns, slightly paralyzing their economy. Some of them even face a worse health outlook compared to the start of the pandemic. The province of Jilin, a benchmark for the automobile sector in the Chinese country, is among these. In recent months thousands of cases have been reported, causing a complete closure of the entire area.

The Beijing government is considering several options due to the increase in cases. The capital is another nerve center when it comes to supply chains. For this reason, the evolution of cases is closely observed to avoid, as far as possible, a scenario of shortages and economic slowdown.

At PINEXPORTS we have been planning for weeks with our suppliers the different options to avoid shortages. If you have doubts, we can advise you, contact us through our form.