China’s ongoing zero-tolerance approach to Covid is causing supply chain chaos around the world.While the Chinese Covid policy, which has led to long lockdowns in major cities and suspended operations in factories and businesses, has had a massive impact on the country’s overall economic growth, it is also stalling global supply chains.Due to the demanding quarantine and testing rules, truck drivers in Chinese cities have been hit exceptionally hard, with the rules significantly increasing the time it takes to get cargo to Chinese ports for export. This has led to ocean freight being diverted to alternative ports.Considering that supply chains thrive on predictability, the ongoing uncertainty in China has led to unstable operating conditions, making any kind of prediction near impossible.The reduced manufacturing capacity in the country has also had an impact. Apple is estimating that production at its major China plant could fall by as much as 30% by the end of the year amid all the Covid curbs. This is not good news for the electronics firm as it will severely impact its end-of-year holiday sales. Global fashion brand Nike has reported that not only has its output at factories dropped, but retail sales in China have dropped by as much as 50% in affected areas.Lockdowns in various Chinese cities are continuing, despite restrictions now being lifted in most parts of the world.
