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Lockdowns in China Block Truck Shipments and Close Factories

BEIJING — China’s mounting Covid-19 restrictions are creating further disruptions to global supply chains for consumer electronics, car parts and other goods.

A growing number of Chinese cities are requiring truck drivers to take daily Covid P.C.R. tests before allowing them to cross municipal borders or are quarantining drivers deemed to be at risk of infection. The measures have limited how quickly drivers can move components among factories and goods from plants to ports.

Shanghai and other major Chinese cities have imposed lengthy, stringent lockdowns to try to control Covid outbreaks. Previous interruptions in the supply of goods from Chinese factories to buyers around the world mainly involved the temporary closure of shipping ports, including in Shenzhen in southeastern China in May and June last year and then near Shanghai last summer.

“The problem is not ships, it’s that there’s no cargo coming because there are no trucks,” said Jarrod Ward, the chief East Asia business development officer in the Shanghai office of Yusen Logistics, a large Japanese supply chain management company.

The testing of truck drivers has been held up because some cities are doing mass testing of residents. Shanghai tested essentially all 25 million people within its borders in a single day on Monday and detected another 21,000 cases on Thursday.

Now, there is an acute shortage of truck drivers in Shanghai and in nearby cities like Kunshan, a center of electronics production. Many electronics components manufacturers are shutting down in Kunshan.

“The key electronics suppliers to Apple, to Tesla, they’re all based there,” said Julie Gerdeman, the chief executive of Everstream, a supply chain risk management affiliate of DHL that is based in San Marcos, Calif.

Apple declined to comment, and Tesla had no immediate reply to questions.

Many factories have tried to stay open by having workers stay on site instead of going home. Employees have been sleeping on mats on the floor for as long as four weeks in some cities in northeastern China. Companies have been storing goods in nearby warehouses while waiting for normal truck traffic to resume.

But as lockdowns stretch on in cities like Shanghai, Changchun and Shenyang, factories are starting to run out of materials to assemble. Some are sending their workers home until further notice.

Making car seats, for example, requires different springs, bolts and other materials. Mr. Ward said car seat producers have run out of components. Volkswagen said the company closed a factory outside of Shanghai.

The Russia-Ukraine War and the Global Economy


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Rising concerns. Russia’s invasion on Ukraine has had a ripple effect across the globe, adding to the stock market’s woes. The conflict has already caused​​ dizzying spikes in energy prices and is causing Europe to raise its military spending.

The cost of energy. Oil prices already were the highest since 2014, and they have continued to rise since the invasion.  Russia is the third-largest producer of oil, so more price increases are inevitable.

Gas supplies. Europe gets nearly 40 percent of its natural gas from Russia, and it is likely to be walloped with higher heating bills. Natural gas reserves are running low, and European leaders worry that Moscow could cut flows in response to the region’s support of Ukraine.

Food prices. Russia is the world’s largest supplier of wheat; together, it and Ukraine account for nearly a quarter of total global exports. Countries like Egypt, which relies heavily on Russian wheat imports, are already looking for alternative suppliers.

Shortages of essential metals. The price of palladium, used in automotive exhaust systems and mobile phones, has been soaring amid fears that Russia, the world’s largest exporter of the metal, could be cut off from global markets. The price of nickel, another key Russian export, has also been rising.

Financial turmoil. Global banks are bracing for the effects of sanctions intended to restrict Russia’s access to foreign capital and limit its ability to process payments in dollars, euros and other currencies crucial for trade. Banks are also on alert for retaliatory cyberattacks by Russia.

While Shanghai’s cases increase, its main rival in electronics manufacturing, Shenzhen, has emerged from lockdown. That is freeing workers and factories there to resume full-speed production.

Retailers and manufacturers in the West have tried to adapt to previous supply chain difficulties in China by switching from ships to air freight, but air freight rates have more than doubled from last year.

The near-total suspension of passenger flights in and out of Shanghai has roughly halved the air freight capacity there, said Zvi Schreiber, the chief executive of Freightos, a freight booking platform. The war in Ukraine has forced many airlines to schedule longer flights around Russia and Ukraine, which means each plane can make fewer trips in a week and often can carry less weight on each flight.

The war in Ukraine is also starting to hurt the availability of Soviet-era Antonov freighters, Mr. Schreiber said. These workhorses of the air freight industry have been kept going in recent years almost entirely by Ukrainian maintenance bases that are now closed.

For companies, any additional disruptions to the global supply chain would come at a particularly fraught moment, on top of rising prices for raw materials and shipping, along with extended delivery times and worker shortages.

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