China’s largest city and the world’s largest cargo port, Shanghai is lifting stringent COVID-19 lockdowns in future weeks, fears over crippling consequences on the world’s economy have been on the rise.
Reopening the city would instigate more disruptions across, as per the experts. Global supply chains are already vulnerable. Thousands of cargo vessels sailing from China toward European and US ports, leading towards fueling, yet another wave of backlogs and delays in shipping.
Bad situation can worsen
International trade operations are slowed down owing to the current situation, as companies and consumers are feeling the pain of skyrocketing prices and exaggerated delays. Haste in reopening could impact the global supply chain, particularly with recent disruptions still resonating worldwide.
In past couple of weeks, manufacturers have been forced to halt / slow down production owing to rigorous lockdowns in the city. There are crippling shortages of raw materials imported from China, by garment and shoe manufacturers. Some car manufacturers have reported substantial disruptions to their operations, whereas one had to shut down its manufacturing facility for three weeks in April, before being permitted to operate under stern health restrictions, which reduced production capacity from 60,000 vehicles per month to only 1,512.
Crux of the situation is that further disruptions could place the world back in square one, causing further inflation hikes and unnecessary pressure on the already vulnerable global supply chains. European shippers are trying alternative locations and ordering small shipments. Therefore, instead of focusing on a single market and producer in China, they’re spreading out the production among multiple manufacturers in China, India, Vietnam and other areas, to maintain flexibility in the supply chain.