Supply chain disruptions are likely to be magnified by China’s zero-Covid policy. Analysts warn that new restrictions will undermine global supply chain recovery as even the smallest disruption in the country may trigger "ripple effects" across the world.
With a surge in new Omicron cases, China’s government has already imposed sweeping lockdowns in an attempt to curb the spread. Naturally, the largest port hubs have been shut down. Workers with the slightest signs of illness are sent to self-isolation. As a result, delivery companies and cargo ships face delays in customs clearance. On top of that, crew members and local workers have to get regularly tested for coronavirus. Hence, some transport companies were forced to suspend work. At the same time, the cost of alternative delivery methods, e.g. air freight, has soared by 50% in recent weeks. Therefore, China’s zero-Covid policy increases the downside risks for revival in supply chains.
Last year, some key ports in China were closed due to the coronavirus outbreak. China is home to about a third of global manufacturing. So, cargo transportation hugely depends on its ports and their stable operation. After their shutdown in 2021, many countries around the world faced delays in the delivery of goods and an increase in their costs.
Notably, the main goal of China’s strict zero-Covid stance is to eliminate the virus, no matter the consequences. The government took a tougher stance on restrictions in the run-up to the Winter Olympics in Beijing and the Lunar New Year holiday.
