Shenzhen lockdown to further test supply chains

New pandemic lockdown restrictions in China’s southern port city of Shenzhen are anticipated to cause further pain to already significantly constrained global supply chains. The lockdown - announced on 13 March - is expected to last a week.

According to Oxford Economics, the recent Covid Omicron-variant outbreak and renewed restrictions, notably the lockdown in Shenzhen, will weigh on consumption and cause supply disruptions in the near term.

“So far the ports in Shenzhen and Shanghai are still operating as usual. But any lockdowns in these ports will exacerbate the global supply problems on top of the disruptions caused by the Russia-Ukraine war,” notes lead China economist Tommy Wu.

Shenzhen is the second-most important port in China after Shanghai, and processes about 10 per cent of containers shipped from the country each month. Both Shenzhen and Shanghai are major electronic manufacturing hubs.

Logistics companies have warned clients that the fresh Covid-induced restrictions will likely cause disruptions and affect the delivery of products from that region.

SEKO Logistics announced that all its businesses in Shenzhen, including the SEKO office and warehouses, will be closed from 14-20th March for all but essential services and that its staff will continue to work from home.

Cross border shipments from Shenzhen to Hong Kong will not move, unless they carry essential goods to Hong Kong.

During last year’s outbreak of Covid-19 in June, throughput at the Yantian International Container Terminal fell by approximately three-quarters.

SEKO noted that parts of Shanghai are being locked down, but there is not yet a full citywide lockdown. “However as the situation continues to worsen this may come into effect in the coming weeks,” it warned. 

“All passenger flights into Shanghai have been diverted to other cities. Currently cargo aircraft has not been affected, however the diversion of passenger aircraft will have an impact on air freight rates.”