Earlier this year, the trade industry began experiencing major disruptions in China, as multiple ports shut down to contain the COVID-19 outbreak. By the end of this year, many shipping experts had hoped operations would resume back to normalcy. Unfortunately, the disruptions still seem to be hindering worldwide supply chains.
As the coronavirus still looms over us, China’s response to the pandemic has created a shift in the foundation of global supply chains. During this state of crisis, companies are being forced to reevaluate the efficiency and simplicity of their supply chain — perhaps a blessing disguise. But as China continues their attempt to control the infection, millions of businesses are suffering the effects.
In June, China temporarily suspended all business operations at the Yantian Port — a decision which further resulted in export delays. In August, a single worker tested positive for COVID-19, causing China to shut down the entire shipping terminal at one of their busiest ports, Ningbo-Zhoushan. Since the event, consumers are noticing significant shipping delays and companies are still suffering to catch up.
This month, China has experienced even more disruptions at one of two terminals at Shanghai Pudong International Airport. COVID-19 infections initiated the close of the terminal, but now, disorganization within the terminal persists, posing a major threat to both consumers and companies as the holiday seasons approaches.
China’s Biggest Cargo Airport Suffers Delays
This isn’t the first time China’s response to an infected worker has caused massive disruption for the entire industry. However, it’s the first time the problem has presented itself at a cargo airport.
After multiple vaccinated workers tested positive for COVID-19, Pudong Air Cargo Terminal (PACTL) was forced to shut down. Now, two weeks later, the terminal has opened up again, but jobseekers say the risk is far too high for cargo handlers. The ongoing disruption has led to numerous flight cancellations and delayed custom clearances.
Additionally, rumors of a labor shortage have taken root as workers point out the restricted cargo space to the terminal and continued air transportation delays. And as global inflation heats up ahead of the holiday season, these events threaten consumer’s plans for Christmas holiday shopping.
Deborah Elms, executive director of the Singapore-based Asian Trade Centre, comments on the ongoing infection situation in Asia, “Delta is likely to significantly disrupt trade in Asia. Most of the markets have been fortunate in managing Covid well so far. But as Covid continues to spread, this lucky streak is likely to end for many locations.”
This fresh new surge of COVID cases paired with the fast-spreading delta variant have thrown global supply chains into turmoil. Both factories and ports located in Asia are now scrambling to somehow return to normal operations in preparation for the holidays, but since Asia accounts for approximately 42 percent of global exports, retailers are starting to look for solutions of their own.
Refining Supply Chains In a Time of Crisis
While many business experts would say that preparation through education is better than preparation through tragedy, global retailers are taking advantage of this time of crisis to refine their supply chains.
After receiving a clear visual of what happens during a global emergency, companies have begun planning several strategies for different demand environments. Additionally, it’s given them a chance to learn how to better mitigate supply shock and manage panic buying situations — i.e., the great toilet paper fiasco of 2020.
Companies have also browsed different shipping and delivery options to create a more appealing alternative for consumers who want to avoid making in-person trips to stores. Plus, this new technology simultaneously keeps employees safe.
Such events can never be predicted, but companies can still take the necessary measures to prepare themselves and their supply chains during a crisis. And when countries like China experience seemingly perpetual disruptions, the best thing retailers can do is try to handle the effects as efficiently as possible to appease consumers.
How China Plans to Address the Issues Plaguing International Shipping
After experiencing a two-week-long suspension, the Meishan terminal at the Ningbo-Zhoushan Port has reopened. Now, China hopes to solve some of the issues that have been created as a result of the port closure.
Record high shipping rates and air transportation restrictions will likely seep into Chinese companies for throughout following year, but Beijing has recently stepped forward to help ease the pressure.
Gao Fend, Ministry of Commerce spokesman, comments on the issue, saying Chinese government departments and ministers are looking to “actively take measures to increase container supply, enhance shipping capacity and strengthen international cooperation.”
On the subject of exports, Fend also mentions how local authorities are assisting small and medium-sized companies to reduce their overall costs and losses.
However, this intervention isn’t expected to put an end to high shipping rates any time soon. Liu Chunting, manager of operations department at China Merchants Energy Shipping, says these shipping rates are likely to stick around for another six months or, worst case scenario, through to the end of the following year.
Global Supply Chains Trudging Through the Pandemic
As the world’s biggest source of manufactured goods, China is taking the biggest hit from the current COVID-19 and delta-variant surges. While the country coped with the previous pandemic surges better than other nations, the fresh delta-variant cases are wreaking havoc on the country’s trading and shipping industries.
China’s zero-tolerance approach to these case surges have further caused disruptions on global supply chains. Especially with the holiday shopping season upon us, retailers and consumers are being forced to plan accordingly. And while executives are hopeful for a course change, it doesn’t look like any major corrections be happening any time soon.
