Shanghai went under complete lockdown at the end of March under China’s Zero-Cavid Tolerance policy. As the so-called lawsuits escalated, China extended the lockdown indefinitely. Shanghai hosts the world’s busiest container port, and the inability to handle it is contributing to the supply chain crisis in a profound way. That’s according to a member of the Shanghai Chapter of the EU Chamber of Commerce Volume decreased by 40% Ports were banned from operating in the first week. There is no set date for the port to be reopened.
It is estimated that the currently imposed lockdown has trapped an alarming 25 million Chinese citizens in their homes, but the impact of closing the world’s largest shipping port amid the supply crisis will send an aftershock into the global economy. To understand how important the port of Shanghai is for the global flow of goods, the port of Shanghai is four times the size of the port of Los Angeles (one of the largest shipping ports in the United States).
Those in the industry have warned of problems. One of the largest international container companies, Maersk said, was due to Shanghai’s closure Only 30% increase in trucking costs.
Some businesses operate a “closed loop” system where employees are largely unable to leave their workplace. However, the port cannot operate under the current restrictions because there are not enough staff. It is not entirely sustainable. China, with their current policy, is throwing gas at the rapidly burning supply chain and the inflation crisis that will be felt around the world.