Logistics has been a roller coaster in the past few years, with ports being shut down, container shortages, and factory closures slowing down the whole global supply chain due to COVID. This includes the U.S.
Just when we thought things were finally getting back to normal, Shanghai went into a citywide shutdown. Shanghai is China’s largest port and has often been called China’s “biggest factory.”
What do the Shanghai shutdown and China’s zero-COVID strategy mean for you and your logistics?
Supply Chain Backlog
The supply chain was far from recovered before this latest Shanghai shut down, but now an already inconsistent and taxed supply chain threatens to come to a complete halt. Truckers must show a negative test within 24 hours to get into Shanghai, causing a 30% drop in efficiency from the loss of trucking transport to the port.
To further compound this drop in efficiency, many ocean carriers are suggesting routing supplies and reefers to other ports. Already, suppliers in Shanghai have been forced to shut down production, meaning the longer this goes on, the more danger there will be of supplies running out entirely.
Logistics are Becoming Tangled
As logistics holdups develop in Shanghai and manufacturing screams to a halt, so too does everything else. With everything from supply to manufacturing to cargo transport experiencing drastic slowdowns, it leaves you with long wait times and an inability to get the products you need. In turn, this leaves your customers frustrated and your bank account dwindling.
Production is Down Everywhere
Since China is a hub for many industries, the effects are being felt across the globe. Freight can’t move, and factories can’t produce. Even when we try to avoid products related to China, parts are often made or manufactured somewhere in China.
Even products not manufactured in China may rely on a Chinese port such as the one in Shanghai that just shut down. One kink in the chain is enough to affect the whole chain, dropping production across the board and causing a logistics backlog.
Costs are Being Driven Up
Even if your products or supplies are not sourced from Shanghai, you’re likely to feel the pinch in your pocketbook and delayed shipping times. As the economy strains to keep up with demand, prices on everything from food to transportation are soaring. Whether you realize it or not, Shanghai is one of the many cogs in the wheel of the world economy.
With all of this logistical upheaval, you’re likely having trouble finding affordable rates for drayage, intermodal, and final mile transportation. It can be time-consuming to find affordable rates while trying to keep up with the rest of the business.
Economic Downturn is Looming
Inflation woes, supply chain disruption, port closures, and the war in Ukraine are all weighing heavily on the economy. No one knows how long the shutdowns in Shanghai will continue or where they may strike next. The chaos, unrest, and shutdowns threaten to shatter the delicate balance of the logistics industry.
Are you struggling to handle your logistics right now? See how we can help you!