China Faces Factory and Port Shutdowns Amid COVID Resurgence... Is a Logistics Crisis Coming?

Worker Infections Increase Ahead of Major Holiday
Production Also Challenged Due to Cargo Transport Suspension

[Asia Economy Culture Young Intern Reporter] As COVID-19 infections rapidly spread in China, major production facilities and ports in Shanghai and Shenzhen are being paralyzed.

With factory and port workers infected with COVID-19 and unable to work, there is a possibility that the global supply chain will deteriorate again. In particular, concerns about a logistics crisis are emerging ahead of China’s largest holiday, the Chunje (春節, Chinese New Year).

The view of Qingdao Port container terminal in 2019. Photo by Yonhap News

On the 5th (local time), US-based CNBC reported, "The surge in COVID-19 infections in China is affecting production and distribution," adding, "Many workers are infected, causing factories to not operate properly, leading to an increase in cargo shipping reservation cancellations."

According to the media, the level of cancellations in maritime cargo shipping reservations is severe. Global shipping company HLS, headquartered in Hong Kong, recently sent a memo to customers stating, "Because 50-75% of workers are infected with COVID-19 and unable to work, many Chinese manufacturers are not operating properly."

It also mentioned that three major ports across China are experiencing shipping problems due to COVID-19, adding, "Due to the increase in infections, most factories are reducing production, so the volume after the Lunar New Year is expected to be very low, and reservations will need to be canceled or postponed in late this month and early next month."

The three ports mentioned by HLS are Shanghai Port, Shenzhen Port, and Qingdao Port. Regarding Shanghai Port, the world’s number one container port, HLS warned, "Many workers infected with COVID-19 are causing factories to not operate properly, leading to an increase in cancellations."

Shenzhen Port, ranked fourth globally and home to Apple’s production base in China, was also reported to have "Many factories unable to operate properly due to many workers infected with COVID-19, resulting in increased reservation cancellations." Regarding Qingdao Port, it was stated that "Labor force is only about a quarter, and many factories are not producing normally."

Emergency ward in Shanghai filled with patients. Photo by Reuters

The problem is that the population will move massively around the Chunje holiday, China’s largest festival, which could cause an explosive increase in infections.

Allen Bear, CEO of logistics company All USA, said, "Factory orders have decreased by 30-40%," and predicted, "Considering the surge in COVID-19 cases after Chunje, the first quarter of this year will be difficult."

Meanwhile, China is appealing that its easing of COVID-19 lockdowns and border reopening will benefit the global economy. However, South Korea is closely monitoring the situation as shipping between China and Korea is expected to be impacted by these developments.