Truckers caught in Covid control Chinese supply chains

(Bloomberg) – China’s network delivering everything from electronic parts to raw materials to factories across the country has come to a halt as Covid-19 restrictions leave hundreds of thousands of truck drivers caught in a web of controls quarantine.

The country relies on its 17.3 million truckers to fill store shelves while connecting the country’s ports to its manufacturing hubs. The standoff prevents crucial deliveries from reaching businesses, stalling production in key industrial regions, with the impact likely to continue to ripple through the economy even as cities move to ease lockdowns.

Tech giants including Semiconductor Manufacturing International Corp. have been hampered by a lack of trucks to ship the chipsets. Logistics bottlenecks are creating parts shortages for companies like iPhone assembler Pegatron Corp. Automakers, including Tesla Inc., have shuttered factories while awaiting shipments of semiconductors.

Read more: Laptop maker Apple joins growing Covid factory shutdowns in China

Stalled productivity threatens to further slow the economy, with economists now predicting a 5% expansion this year, below the official target of around 5.5%. China’s pursuit of a Covid Zero strategy is likely to create supply chain disruptions that will last through most of 2022, according to Morgan Stanley.

The impact of the Covid measures has been severe. According to Ernan Cui, an analyst at Gavekal Dragonomics, a measure of national truck traffic has already fallen by around 40% from mid-March, with activity around Shanghai itself at just 15% of normal levels.

“The central government is now trying to solve these transportation problems, so the problem may have stopped getting worse,” Cui said. “But a full recovery is impossible until more cities ease border controls and other public health restrictions, which is unlikely before the end of April.”

Trucks dominate local transport in China, carrying about three-quarters of total freight, according to data from the Ministry of Transport.

Read more: Here’s how China’s lockdowns are impacting the economy

Covid Zero orders create difficult conditions for the truckers themselves. Drivers have been hampered by the need to undergo mandatory mass testing conducted in cities like Shanghai and the need to show negative Covid results at multiple checkpoints.

In some cases, truckers have been locked inside their cabs, their doors and windows covered in plastic, leaving them locked inside their vehicles.

“I was stuck in my truck for almost 24 hours last weekend,” said a driver, surnamed Song, who declined to give his full name. “Like all the other exhausted truckers helping with the supply shortage, I need to eat, drink, pee. They have sealed our truck windows at almost every checkpoint.

That leaves long lines of trucks parked on highways with nowhere to go or clogging the few service center areas that remain open, state broadcaster CCTV reported.

Truckers faced onerous conditions even before the lockdowns were put in place, with more than 37% of drivers working more than 12 hours on average per day, according to a June 2021 report from the China Logistics and Purchasing Federation. .

Many truckers are bristling at the restrictions, considering themselves essential workers during the pandemic.

“Delivering materials to build makeshift hospitals, vegetables and essential supplies – which of these could be done without us truck drivers?” said a trucker in a video widely shared on social media.

The harsh lockdown measures have paralyzed transportation in the Yangtze River Delta region. This includes the world’s largest port, Shanghai, where ineffective Covid testing reduced the number of truck drivers with valid certificates while other drivers stayed away to avoid mandatory quarantines, according to a report by Caixin at the end of last month.

The trucking of base metals like copper and zinc into and out of Shanghai warehouses, including those in the bonded free zones, has largely come to a halt since the start of this month, according to traders and logistics officials.

Read more: Shanghai’s sudden lockdown scolds China’s biggest metal hub

The automotive industry has also been affected by supply chain issues. Electric vehicle maker Nio Inc. halted production and suspended deliveries as many of its suppliers had to close their factories.

“The pandemic sprawling in the regions, especially in Jilin Province and Shanghai City, is having a huge impact on both production and dealership,” said Cui Dongshu, general secretary of the China Passenger Car Association. , during a briefing earlier this month. the week. “The change in Covid prevention policies in different cities has imposed an extraordinarily severe impact on logistics.”

©2022 Bloomberg LP

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