As global port congestion and COVID-19 driven labor shortages drag on, Chinese New Year brings with it added pressures to the already strained supply chain. The second month of 2022, and the start of the year of the Tiger, continues to be challenging for manufacturers and this helps to shape the things companies should focus on following to mitigate near-term impact.
The coming of the Chinese New year enables a focus upon China and its pivotal role in the global supply chain. Various ongoing supply chain restrictions have led to rising costs of raw materials and shipping containers, which, in turn, is impacting manufacturers and end-consumers alike.
Looking at some of the challenges for Digital Journal is Richard Barnett, CMO at Supplyframe.
According to Barnett the latest holiday event also provides a chance for renewed focus and action. As he explains: “Chinese New Year will be particularly challenging this year as labor shortages create an even greater backlog at major Chinese ports.” Yet there are actions that can be taken.
Furthermore, looking at some of the roots of the problem, the analyst says: “This is being exacerbated by China’s zero-tolerance COVID-19 policy, which creates added pressures on top of the existing supply chain problems and normal seasonal issues related to Chinese New Year. We expect to see at least a week’s worth of added delays due to these concerns.”
While many commentators would argue that a safe approach to the SARs-CoV-2 virus is important, especially given the horrendous impact within China, Barnett is considering things from a business perspective.
For example, cases have been reported in the key port cities of Shenzhen, Tianjin and Ningbo, as well as the industrial hub of Xi’an, sparking lockdowns. Each lockdown disrupts the flow of trade and impacts the local and international economy.
Barnett’s advice to companies with this trading sector is: “To mitigate the near-term impact following the holiday, manufacturers need to address current and future supply chain complexity, and growing customer expectations, by transforming their supply chain strategies with data intelligence. Manufacturers and distributors that aren’t already deep into digital transformation of their supply chains are already behind the curve.”
