Bottom Line Up Front
As China reopens, the significant spike in COVID-19 cases, combined with the Chinese New Year holiday, is set to have an impact this Spring on global trade, particularly for items already in tight supply. Over the past months, we have seen a number of factories’ production output impacted by outbreaks, causing existing orders to be pushed out 1-2 months. Something to watch to see if they can get back on track or if the CNY holiday fuels the COVID spike and compounds the production delays. At Resilient Medical, we diversify our global supply chain with multiple countries of origin, along with holding 60 days of additional safety stock in our Charlotte warehouse, to insulate our customers from these types of issues.
As the world continues to recover from the COVID-19 pandemic, the upcoming Chinese New Year is adding an additional layer of complexity to global trade.
The Chinese New Year, also known as the Lunar New Year, is a major holiday in China and many other Asian countries. It typically involves extended factory closures, as workers travel to be with their families. This year, the holiday is set to begin on January 22nd and factories are expected to be closed for several weeks.
The timing of the holiday is particularly concerning for global trade, as it coincides with ongoing disruptions caused by China’s abrupt change in policy regarding COVID-19. Many factories and ports in China have been operating at reduced capacity since December, due to the sudden rise in COVID-19 cases, and the upcoming holiday is likely to exacerbate these issues.
As a result, many businesses around the world are bracing for delays in receiving goods from China, as well as potential shortages of certain products. Inventory levels stateside remain elevated for many goods, however, imported items that have recently been in short supply could be impacted severely. We would anticipate any issues to impact already strained supply chains in the Spring of 2023.
Below are a couple of articles from industry publications further elaborating on the situation.
SupplyChainDive: China’s spike in COVID-19 cases strains factories
CNBC: China’s new Covid surge is crippling the world’s most important factories and biggest ports