Global trade has been one of the hardest hit by the COVID-19 pandemic, as many businesses in different countries rely on supply chain processes and logistics to ensure the smooth flow of operational flow. However, with global factories losing their momentum in terms of production it will have a domino effect, especially with a multitude of multinational companies heavily investing in China due to their lower production costs. Yet, with the ongoing Supply Chain Disruptions in China, global trade will take a hit, with experts stating that Christmas goods this season may not be available or delivered on time. There are several reasons for the supply chain disruptions in China, of which the following are significant.
US-China Trade War
The ongoing US-China trade war has significantly caused supply chain disruptions in China, in terms of rising labour costs, automation, protectionism, and geopolitical tensions, whereby it has ignited the way global sourcing and manufacturing occurs to improve resiliency and reduce external risks, Yet, the global trade has been hard-hit by supply chain disruptions in China caused by the US-China Trade War. Whilst China has been resilient in enforcing coping strategies by capitalizing on integrating with supply value chains in the Asia Pacific region, with the likes of APEC (Asia-Pacific Economic Cooperation) and ASEAN (Association of Southeast Asian Nations) agreements. Whilst these strategies have allowed progress, yet supply chain issues globally have been affected.
Pandemic and Rising Cases
COVID-19 cases are relatively low in China, primarily due to its zero-tolerance approach to case detection, which includes shut-downs for even one confirmed case to curb the spread. This has causes manufacturing factories to partly shut down due to these sudden decisions whereby experts state that these supply chain disruptions in China can cause domino effects in terms of consumer pricing in the future.
Central China has suffered flooding which has halted communal transport measures causing multi-disciplinary industries to come to a standstill which will cause delays in delivery and deadlines, especially with manufacturing equipment delays and assessments to adapt infrastructure in preparation for the next disaster.
Shipping Container Shortage
The shipping container shortage continues to affect supply chain processes due to the disparity in trade volumes whereby now major buyers have resorted to opting for private charter vessels to ensure that delivery of goods will occur with shipping containers being sent to prevent further supply chain disruptions in China to make the deadlines for the upcoming holiday season.
Electricity Supply Shortage
However, whilst all the above have an impact or continues to pose a threat to the supply chain, disruptions in China continues with the electricity supply being curbed by local governments in an attempt to achieve targets for reducing energy and emissions intensity.