Covid Lockdowns in China Again Cramping Supply Chain

New York, NY, May 5, 2022-Some U.S. companies are warning that Covid-19 lockdowns in Shanghai and elsewhere in China are denting sales, disrupting operations and putting added strain on supply chains that could be felt well into the summer, reports the Wall Street Journal.

“Apple Inc. said it could take a sales hit of as much as $8 billion in its current quarter, primarily because of the Shanghai lockdowns. Industrial giant Honeywell International Inc. said the Covid measures had curbed production at half of its Chinese plants. J.B. Hunt Transport Services Inc. said the freight carrier’s customers are worried about deliveries scheduled for July.

“Since the emergence of the virus, China generally has stuck to a zero-tolerance approach to dealing with flare-ups, using mass testing and travel restrictions along with widespread lockdowns. The latest wave in Shanghai started in early March, closing factories of companies including electric-car maker Tesla Inc. and consumer-products maker Procter & Gamble Co. 

“Much of the rest of the developed world has adopted a strategy of minimizing Covid infections and managing waves while avoiding severe disruptions to business and daily life. Given China’s role as a key supplier to the world, the policy disparity has created an imbalance. Shanghai, a manufacturing and shipping hub of 25 million residents, accounted for 3.8% of China’s gross domestic product in 2021 and 7.2% of the country’s exports, according to Bank of America.

“The Institute for Supply Management said its index of U.S. manufacturing activity in April hit its lowest level since July 2020, and the average time to receive production materials increased to 100 days in April, its longest span ever. In the survey, 15% of panelists expressed concern about the ability of partners in Asia to reliably make deliveries in the summer months, up from 5% in March.”