LONDON – In recent weeks, the bustling city of Shanghai has been put under strict lockdown after the city registered 71,000 new cases of COVID-19 on the 1st of March.
In addition, AviationSource recently reported how the local Centre for Disease Control had capped all arriving commercial aircraft (Domestic and International) at 40% capacity – a further reduction from the original 75% imposed in recent months.
When the world first went onto lockdown, the entire world sat at home. However, nobody expected the world to run itself. Supermarket shelves had to be stacked, fuel delivered, and most importantly, hospital patients needed to be cared for.
The people running the show were applauded; these people, mostly considered ‘invisible’ until 2020 were now the heroes of society.
They were also known as essential workers. They were not locked down as they served a primary role that society would not function without.
When Shanghai went into lockdown to slow down the rising number of positive cases, there was no differentiation between those who were essential and those who weren’t.
Not Enough Truck Drivers to Deliver Freight…
The latest Shanghai Lockdown is heavily impacting the global supply chain. According to freight forwarding & supply chain specialist Woodland Group, a UK-based Logistics advisory firm, operations at Shanghai’s busiest airport remain constrained and limited.
“The cargo currently being processed is pre-lockdown freight with many limitations due to shortages of trucks available to deliver the Cargo to the airport” adds Woodland.
Moreover, Shanghai workers are also locked down, this is preventing the few arriving aircraft to be unloaded and turned around in a timely manner. Efforts have been made to keep the workforce active, including co-sleeping facilities in the now empty airport terminals.
As a result of delivery delays, many Production lines suffer greatly, leading companies like Nio, a Shanghai-based electric vehicle company, to suspend production and delay delivery of completed units.
Guangzhou in southeast China has also enforced new Covid restrictions after cases rose in the city. This is expected to hit Guangzhou’s automotive, petrochemical, and electronics industries, further adding to supply chain delays and bottlenecks.
The airfreight industry will monitor constant changes in capacity and rates.
Various freight advisory firms (including Woodland logistics) warn that shipping rates are set to increase if the backlog of freight cargo continues and lockdown restrictions on essential workers are not lifted.
Recovery Will Be Difficult to Implement…
“It is impossible to see everything returning to pre-covid levels in the next couple of years if at all” Adds Woodland, presenting a rather pessimistic vision of the years to come.
He added: “To hang on to a hope of significant rate reductions in the short to medium term is almost certainly a flawed business strategy”.
The Asian, European and North American markets have been the most affected by air freight rates in the past two years. If countries like China, which heavily rely on foreign markets to prosper, continue with a zero covid case policy there will be no end in sight to the bottleneck created.
If lockdown were not enough, supply factors contributing to the high-rate levels include port congestion, equipment turnaround, and schedule disruption.
“For example, Northern China is currently experiencing a higher degree of equipment shortages, and therefore rates are significantly higher than the rest of China,” said Westbound from Woodland logistics advisory firm.
The western hemisphere is fighting its own battles; both port and warehouse congestion in North America are creating supply chain issues, while Europe is still seeing the effect of the post-Brexit European Union.