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COVID-19 Lockdown in China Might Affect E-Commerce Delivery to S’pore

2022-03-17 , 1:08 pm

In contrast to the European countries that have relaxed their COVID-19 restriction amidst the Omicron-dominant wave of infections, China is still holding strong to its zero-tolerance for COVID-19 policy.

We used to joke that everything is “Made in China”, but that inadvertently points out the reliance that we have on China in terms of the manufacturing and production of goods and services.

True to the analysis of many economists, the negative side effects caused by China’s tight restriction policies are starting to become more pronounced.

Shenzhen on Citywide Lockdown

In order to contain the spread of COVID-19, the Chinese Community Party (CCP) of China has just reinforced a seven-day citywide lockdown in Shenzhen, starting from last Sunday (13 Mar).

The lockdown is particularly troublesome because Shenzhen is China’s tech and manufacturing hub, and home to the fourth busiest port in the world by container traffic, as reported by Investment Monitor in 2021.

Image: shutterstock.com (zhangyang13576997233)

Although Yantian Port remains open, non-essential businesses and public transport were shut down temporarily.

This definitely spells trouble for global commerce.

Implications of the Lockdown

Even if the ocean freight terminals are open, it means nothing if there’s a lack of truck drivers and warehouse operators to store, transfer and/or ship out the goods.

All in all, there are bound to be delays when it comes to unloading and filling the ship containers that are arriving at the port.

Lazada, an e-commerce platform, announced that COVID-19 lockdown in Shenzhen might affect the shipping time for some of the customer orders coming from China.

The company is helpless to the situation too; besides reaching out to the customers whose orders might be affected to explain the situation, Lazada is trying its best to work with its logistical partners to reduce the amount of delay the best they can.

One of the Lazada e-mails sent to a customer stated that the buyer’s delivery will be delayed, but the order can’t be cancelled because the seller has just shipped the item.

Ergo, your purchase is either stuck at the delivery office, in a truck, or a shipping container.

It will eventually arrive, but it’s now a question of “when”.

Not sure which location is worse, but I sure hope the package doesn’t contain any ice cream.

To ensure more transparency about the entire predicament, Lazada has put up notifications on its application and website, warning of possible delays for cross-border orders.

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Supply Chain Disruptions for Businesses

For Small and Medium Enterprises (SMEs), the delays might generate short-term spikes in costs for firms.

Owing to the lockdown, areas such as factories and logistics parks might be deemed non-essential and closed, which will affect the flow of cargo. Therefore, shippers are expecting that vessel schedules will change.

One of the main factors that will affect vessel schedules is how fast or slow the vessel is filled up with the cargo that it needs to deliver.

Truck drivers are essential to moving the goods to or from Shenzhen, but since they are also subjected COVID-19 testing, a significant number of them might not be able to work which largely slows down the movement of trade.

Hence, some vessels have chosen to avoid or skip Shenzhen docks altogether in search for calmer and less congested waters, to avoid delays.

For example, while the container loads at Shenzhen have “massively decreased” since the lockdown, more ships have flocked towards the key anchorage of Shanghai.

Bloomberg reported that the zero-tolerance policy has also caused a great deal of disruption for the production and delivery of goods sold at major online e-commerce platforms like Amazon and Walmart.

They added that the majority of the production has been tentatively halted in China, and deliveries are piling up as logistics firms and warehouses are closed or working at a reduced capacity.

… I offer a silent prayer to the roster of staff that have to deal with the backlog after the lockdown is over.

Improvements from the Past

However, this is not the first time businesses have been confronted with supply disruptions.

Maybank Kim Eng senior economist Chua Hak Bin believes that the seven-day lockdown won’t impact firms and businesses too drastically.

Given that Singapore sees a lot of exports and imports even during the pandemic, and have maintained that maritime trade is part of the listed essential jobs, businesses and firms should still have sufficient inventories to tap into, until the supply chain is properly restored.

On the other hand, the electronic manufacturing sector which is primarily focused on producing intermediate products such as semiconductors rather than the final consumer goods, will be more susceptible to supply disruptions and component shortages.

Nevertheless, technology has made it easier to access crucial information about the most recent changes which improves the visibility of the global supply information.

With this precious information in mind, firms and businesses can work to diversify their sources of supply, come up with alternative routes and solutions, as well as revise their inventory and stocking strategies to better manage the risk of disruption.

As long as China continues implementing its strict zero-tolerance for COVID-19 policy, it’s hard to predict if they’ll call for another citywide lockdown in another important province again.

It doesn’t help that compared to the other COVID-19 sibling variants, Omicron has proven to be much harder to control with its higher rates of transmissibility.

The lockdown might have been established with good intentions, but sometimes it’s better to just roll with the punches and just let it be.