A report by leading supply chain insights firm Interos has found that more than 20,000 Shanghai-based Tier-1 suppliers to U.S. companies were shut down in late March. The number hits 95,000 when Tier-2 vendors are included, and around 203,500 at Tier-3 level.
The Chinese government recently escalated its response to a COVID-19 outbreak in Shanghai, sending 10,000 health workers and 2,000 military personnel in to conduct mass tests of every city dweller.
Shanghai is home to 26 million people, and at the latest census, 9,000 new cases were reported across the city.
The test is the country’s latest step in its zero-tolerance approach to COVID-19, which continues to have a major impact on supply chains, the global economy and companies such as Tesla and Volkswagen, which have large factories in the region. These and many other factories were forced to temporarily shut down in the initial phase of the recent shutdown.
And although Chinese officials claim that the port of Shanghai remains open, dockworkers, factory workers and truck drivers are not allowed to travel to work, which hampers the delivery of containers.
China’s Covid zero tolerance hits global supply chains
Elsewhere in China, the Chinese government has also locked up the main business city of Shenzhen and ten other areas due to eruptions.
In the northeastern part of the country, Changchun and other cities in Jilin province are closed, and smaller cities such as Suifenhe and Manzhouli – on China’s border with Russia – are also temporarily closed.
Many of these areas in China are critical international hubs for manufacturing and technology. The extreme and now frequent shutdowns have further strained already stressed global supply chains.
The Interos report provides sober reading for anyone concerned about the short- to medium-term outlook for easing global supply chain disruptions.
See the graphic below for full details.
Interos is an AI-based operational robustness solution built from a highly connected, multidimensional network of B2B relationships.