Brace for delays to your Amazon and Walmart orders, trade official warns
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- The head of a trade group said the COVID-19 lockdown in China could delay Amazon and Walmart orders.
- The Chinese city of Shenzhen is responsible for about half of online retail exports.
- An Amazon spokesperson said they do not expect "a significant disruption."
COVID-19 shutdowns in China are threatening to delay online orders for companies like Amazon and Walmart.
The Chinese city of Shenzhen — which is responsible for about half of online retail exports — went into lockdown on Sunday after the National Health Commission reported the country was facing its worst outbreak in two years.
The manufacturing city's 17.5 million residents are now in lockdown and all businesses outside of essential public services are shut down for at least a week. Most manufacturing and logistics companies in Shenzhen have either been shut down entirely or are operating at a heavily reduced capacity, Wang Xin, head of the Shenzhen Cross-Border E-Commerce Association, told Bloomberg on Tuesday.
"Even if you're not in the areas with serious cases, you're not allowed to do anything," Xin said, noting that companies that have not halted production have faced fines from the Chinese government.
Xin, whose trade group is responsible for about 3,000 exporters from some of the highest selling online products, said the lockdown is likely to tack on delays to the production and delivery of ecommerce goods and even top retailers like Walmart and Amazon will not be immune.
An Amazon spokesperson told Insider the company does not expect "a significant disruption."
"We are able to counter these closures by diverting available freight to our neighboring warehouses in the region not impacted by COVID lockdown/restrictions, " the spokesperson said.
A spokesperson from Walmart did not immediately respond to a request for comment from Insider.
The supply-chain disruption adds on to historic delays that the retail industry has been forced to combat since the pandemic started. On Tuesday, Chang Shu, chief economist for Bloomberg Economics in Asia, warned that the restrictions in Shenzhen could cause the most significant coronavirus-related impact on economic growth since the first COVID-19 lockdown in 2020.
Zvi Schreiber, CEO of global freight booking platform Freightos, told Insider the shutdown is likely to cause "serious congestion" at nearby ports and could cause transportation prices to jump up 21% to 25% higher.
"The lockdown announced in Shenzhen will send shockwaves through global supply chains," Simon Geale, the executive vice president of the advisory firm Proxima, told Insider. "A one-week delay means that roughly half a million containers are not starting their journey," he added.
The latest supply-chain disruption comes at a time when Russia's attack on Ukraine is already threatening to triple ocean shipping rates. Meanwhile, fuel prices are surging and exporters looking to avoid the Black Sea are buying up cargo planes — meaning it will be increasingly difficult for retailers to divert their products from Shenzhen.
Walmart and Amazon are not the only retailers feeling the pinch from China's lockdown policies. On Monday, Foxconn, a major Apple supplier, paused production in Shenzhen due to the outbreak. The company said it had resumed some production as of Wednesday.
Experts previously told Insider that additional transportation costs from supply-chain snags will likely be passed on to customers. Since the onset of the global pandemic, inflation has added $32 billion to what Americans have paid online for the same amount of goods, Bloomberg reported on Wednesday.
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