China Lockdowns Worry Businesses as Shipping Uncertainty Grows

More companies are expressing concern over delays in shipping of goods made in China due to rising Covid cases and the country’s efforts to control infections, the chief of freight-forwarder Flexport Inc. said.

Some plants are closed and finding truck drivers who are Covid-free to move cargo have caused supply chain delays, Ryan Petersen, Flexport’s chief executive officer, said in an interview with Bloomberg News in Singapore Thursday. It now takes about on average 115 days for goods to reach a warehouse in the U.S. from the moment they are produced at a factory, up from 50 days in 2019, he added.

“Anything that reduces capacity, even if it’s a little bit, can lead to higher prices, more delays, more challenges,” Petersen said. “What customers tell us is, they don’t like it if that delay becomes longer, but they can live with it. What is really difficult is when it changes dramatically and it gets longer.”

The world’s supply chains are still being hammered by labor shortages and logistics challenges as the pandemic enters its third year — with disruptions still varying country to country. The majority of Shanghai’s 25 million residents has been under lockdown, causing factories to close and shortage of trucks to move goods at the home of the world’s busiest container port.

Some companies are diversifying by adding more suppliers to minimize the potential impact from disruptions to their supply chains, Petersen said. They are also buying from production bases that are closer to their key markets, such as Mexico, he added.

Petersen also said that it’s become more difficult to predict how long the supply chain disruptions would last because of the uncertainty over the pandemic and whether consumer behavior will change as social restrictions are lifted.

Author: Kyunghee Park, BNN Bloomberg

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