Lockdown in Shenzhen: How will it impact supply chains?

March 21, 2022
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It’s a difficult time of year for logistics companies right now. A series of disruptive events across the globe have caused all manner of issues, and the latest significant world news that’s likely to cause further problems is a new COVID-19 lockdown in the Chinese city of Shenzhen.

All around the world, supply chain managers are readjusting the routes of their cargo boats as congestion builds up around the area, including in Yantian, the world’s third-largest port. It’s going to take a massive logistical effort to curb the effects of this lockdown, and a good place to start is finding out what the effects could be and how long they’ll last.

When is the lockdown from and to?

The city went into lockdown on Monday 14th March with an initial announcement that it could last one week. However, if previous COVID lockdowns in China are anything to go by, those in supply chain management should begin to prepare for it to last longer than this.

That being said, the lockdown was loosened a little on Friday 18th March. President Xi is understandably concerned of the economic impact of a lockdown that lasts too long, so five districts of the city have been allowed to reopen. 

Unfortunately, the end of the lockdown won’t necessarily mean the end of supply chain issues. It could take quite some time for things to get back to normal again as even a few days of hold-up will cause implications that will take some time to fix. Let’s take a look at what they could be.

What kind of issues should we expect to see?

Some are claiming that this new lockdown could cause greater issues to supply chains than the blocking of the Suez Canal last year. But what exactly does that mean?

With a population of 17 million people, Shenzhen is a big player in the global supply trade. Worse news is that the world’s third-largest port, Yantian, is in the area and with employees made to stay at home, the productivity of the port is running very low indeed.

While the port has officially stayed open, it actually closed for cargo operations. As vessels approach the port, they’re being made to wait and this is causing an ever-growing backup, hence the comparison to the Suez Canal incident of 2021.

Moving forwards after the Shenzhen lockdown

It’s unclear as to how long the disruptions from this lockdown will go on for as that depends on when restrictions are fully lifted again. With luck, the Shenzhen lockdown will end when the Chinese government originally said it will end.

After this, a monumental effort will be needed to restore business as usual to the port and the city as a whole. The Suez Canal was blocked for just six days yet the aftermath of it lasted for months. While this is a busier shipping lane as a whole, traffic in China is not far off. We’re keeping our fingers crossed that things will start to unravel soon.