Top 3 Things Disrupting Supply Chains in China Right Now

Product companies manufacturing in China are struggling to adapt to new supply chain disruptions over the last month. Many companies were already struggling to keep up with consumer orders. Now, they have serious concerns about meeting increased demand during the upcoming holiday shopping season. Here are the top 3 things disrupting supply chains in China right now:

1. Flood Waters in Zhengzhou

Flooding in central China has threatened multi-industry supply chains, including electronics and agriculture. Jammed highways and flooded subway lines have left many employees unable to get to work. Companies like Nissan have halted production to restore manufacturing equipment and review damage. Since the flooding in July, local authorities have started to adapt infrastructure to better prepare for the next heavy rains and prevent future damage and delays.

2. Rising Covid Cases and Concerns

The recent surge in Covid-19 cases risks affecting global supply chains just as the busiest shopping season begins. While China’s cases are relatively low, it has a zero-tolerance approach to any outbreaks. One of the world’s busiest container ports, Ningbo-Zhoushan was partly shut down recently after just one confirmed case. In Southeast Asia, factory executives have interrupted production of electronics, garments, and other goods. The United Nations estimates that 42% of global exports are sourced in Asia, and the ripple effect of high consumer prices will show up across the world.

3. Shipping Container Shortage

High consumer demand and shipping disruptions are causing the current shipping container shortage, or “container dislocation.” Maritime research consultancy, Drewry, explained that “in principle there are more than enough containers to handle trade volumes, but it comes down to availability in several parts of the world.” Large volumes of containers are stuck in the wrong place. Container costs are also at a record high. Major retailers like Walmart, Home Depot, and IKEA have resorted to chartering private cargo vessels at $40,000 a day and purchasing their own shipping containers to keep goods flowing ahead of the holiday season.

React Faster With Blacksmith

While we can’t predict the future, we promise to keep our clients up to date on the latest supply chain disruptions so you can pivot and react faster. If you would like to learn more about how we keep our clients ahead of global disasters, contact us today.