Shanghai logjams flattening Chinese growth and could impact global supply chains for months

Tue 3 May 2022
Posted by: William Barns-Graham
Trade News

china logjam

China’s strict Covid lockdowns will result in most sectors and international markets experiencing delays or shortages in the coming months, economists have warned.

With 25m people in Shanghai affected by restrictions, global tech giants such as Apple and Tesla are among companies hit hard by the shortage of semiconductors.

Logjams are also building at the world’s largest port, which is in the city, and volumes are 30% below normal levels according to research by Vincent Stamer of the Kiel Institute for the World Economy in Germany.

Stressed supply chains

“At the beginning of the lockdown, we were told that Shanghai port was operational and goods were flowing through,” he told the Times.

“Since then, we have seen drops in the volumes leaving the port,” he added. “We’ve still got goods flowing out, but the factories that are producing those goods are now in lockdown.”

He believes that Europe could experience 6% fewer goods arriving from China as a result. 


Marco Forgione, director general at the Institute of Export and International Trade, also told the Times that international supply chains are under real stress.

“We’re seeing shortages now, but if you look forward, Christmas orders are not far away and if rolling lockdowns continue, there will be implications,” he said.

Chinese stagnation

Economists think that China’s GDP will be heavily affected and that the economy may already be stagnant.

Julian Evans-Pritchard, senior China economist at Capital Economics, said: “The authorities will most likely publish GDP figures showing them meeting their annual growth target on paper, but the reality will be a lot less rosy. We expect the economy to expand by only 2% this year.”

Perishable cargo

In the US, exporters of perishable goods are struggling with a shortage of containers and lack of capacity, reports the Loadstar.

Lockdowns, a greater number of inspections and disruptions at overseas destinations have also stretched transit times, with only 35% of perishable deliveries arriving to overseas customers on time.

According to the Agriculture Transportation Coalition, last year more than 20% of US agriculture exports were lost due to carrier issues and excessive pricing.

Ukraine impact

Russia’s invasion of Ukraine also continues to impact supply chains, with governments looking to secure food and other commodities amid rising prices, reports the New York Times.

Export restrictions are making grains, oils, meat and fertiliser more expensive and even harder to come by and disproportionately affecting poorer countries and their populations.

Rising protectionism

Simon Evenett, a professor of international trade and economic development at the University of St Gallen, has tracked 47 export curbs on food and fertilizers since the beginning of the year.

China began ordering its firms to stop selling fertiliser to other countries last summer to preserve its own supplies, and Russia has also cut off exports of fertiliser.

Ukraine has limited exports of sunflower oil, wheat, oats and cattle in an attempt to protect its war-torn economy.

Indonesia – which produces more than half the world’s palm oil – has also halted shipments. Turkey has stopped exports of butter, beef, lamb, goats, maize and vegetable oils.