IndustryWeek – Expect Backlogs, not Valentines, from China in February

January 18, 2022

Ask anyone who depends on products that come out of China how confident they are that the supply chain is reliable, and you will hear stories of product price increases, higher logistics costs and shortages… Looking back at 2021 and the Delta lockdowns in China gives us a good model for Beijing’s response to Omicron. My team at supply-chain consultancy Seraph and I expect that China will continue to follow the “zero tolerance” strategy, but with a virus where the R0 (basic reproductive number, i.e., an indicator of how contagious the virus is) is higher than Delta, it is unclear how many areas will need to be locked down.

…Ports in China have also been impacted by Omicron, and while operations have not halted, bottlenecks are growing. Ships continue to pile up off the coast of Long Beach, Calif.; the ship time of containers from China to the U.S. remain many times higher than pre-pandemic; and goods are sitting in Chinese ports for extended periods.

When the Chinese bottlenecks finally burst, it will create a renewed wave of pressure as they arrive at U.S. ports. These higher costs and increased delays are the current state in mid-January; if we hit a long shutdown, expect both the cost of shipping and time from manufacturing to end customer to continue to grow. In an overloaded system, any additional pressure will likely have a significant impact and will create backlogs that will drive prices higher for a minimum of six and possibly as many as 18 months.

To read the rest of this article by Ambrose Conroy, Seraph’s founder and CEO, please go to n Industry Week.

This article also ran in Material Handling & Logistics.

About Seraph 

A global enterprise consulting firm that partners with business leaders to handle their most complex problems in areas such as supply chain, operations, and manufacturing challenges while delivering long-term operational and leadership improvements. Seraph has extensive on-site industry experience in the automotive, private equity, defense, medical device, electronics, energy infrastructure, and engineering sectors. The Seraph leadership team brings vast expertise across; crisis management, mergers, acquisitions, due diligence, restructuring, turn-around services, product launches, and logistics. Our four-phase process has been proven to provide quick payback and positive ROI, which is measured throughout customer engagement. Learn more at www.seraph.com and follow Seraph on LinkedIn.

Related Articles

Scripps News Tonight: UAW Strike Impacts on Automakers

Scripps News Tonight: UAW Strike Impacts on Automakers

At the stroke of midnight last Friday (9/15), the United Auto Workers union initiated the strike against the prominent Detroit automakers. This labor action saw employees cease their work at three manufacturing facilities situated in the United States. The UAW...