In March 2022, China, as the world’s “top student” in fighting the epidemic, was quietly defeated by the new coronavirus, and the epidemic spread in many provinces. As the number of confirmed cases of COVID-19 in the Yangtze River Delta continues to increase, local epidemic prevention policies for trucks continue to change, almost to the extent of “changing every day” in some areas, which also brings challenges to freight management.
Yangtze River Delta road freight transportation during the epidemic:
Shutdowns, out-of-stocks and unprecedented challenges
Starting from the Kunshan entrance, on March 30, Chen Yuan tried four high-speed entrances one after another, but failed to enter the Beijing-Shanghai Expressway.
“There are epidemic prevention personnel at every highway entrance. Only vehicles transporting epidemic prevention materials can pass, and nothing else can,” Chen Yuan said.
Chen Yuan is a truck driver in Kunshan City. On March 30, he planned to transport a batch of consumables for electronics factories from Kunshan to the urban area of Suzhou, 50 kilometers away. However, because the highway was closed and the national and provincial roads were not open, Chen Yuan could only tell Customer, I can’t deliver it.
That night, the policy changed again. Non-Suzhou local vehicles could leave the city, but local Suzhou vehicles could not.
On March 31, the situation changed again. Chen Yuan’s car was equipped with a GPS, and he did not dare to leave Kunshan. As of April 1, Chen Yuan has not yet figured out what the new regulations are, and he doesn’t need to figure it out – his community has just become a control area.
The COVID-19 epidemic in Shanghai is facing “the most severe challenge since normalization”. Suzhou, Wuxi and other cities in the Yangtze River Delta region continue to have newly confirmed local cases of COVID-19 or asymptomatic infections. It was mentioned in Suzhou City Epidemic Prevention and Control Announcement No. 82 of 2022 that there were 16 new local asymptomatic infections on that day (March 29), “mostly freight drivers and passengers returning to Suzhou from other provinces and cities and their related personnel”.
Due to epidemic prevention and control, local governments in many cities in the Yangtze River Delta have adopted increasingly strict controls on the circulation of trucks, and control policies are constantly changing, and the corresponding impact on logistics is also increasing.
A person in charge of a large freight platform in Shanghai said that taking his platform as an example, before April 1, 40% of the cargo flow from Shanghai had been affected, mainly in Jiaxing, Huzhou, Wuxi and Kunshan and Taicang in Suzhou. Mainly in areas such as Ningbo, Wenzhou, Xiaoshan and other areas, the impact is slightly smaller.
On the one hand, the reason lies in the local government’s strict epidemic prevention policy, and on the other hand, it is also related to the lack of drivers and vehicles. “The driver has gone and cannot come back, and the logistics has become a one-way operation,” the person in charge said.
The Yangtze River Delta is China’s most economically active region and is also the most active logistics region. Taking the above-mentioned platform as an example, Anhui, Shanghai and Jiangsu and Zhejiang account for more than 50% of the country’s cargo volume. There are various types of goods, and a considerable proportion of them are parts and components. Such middleware is particularly critical for industrial operations.
“In the past two days, I have often received calls from customers, asking whether they can be delivered anywhere. If they are not delivered to the factory, the goods will be out of stock,” the person in charge said.
Wuxi and many other places have implemented lockdowns and adjustments to control measures
Many industries are facing the crisis of work suspension and production suspension
On March 31, 2022, the Service Industry Survey Center of the National Bureau of Statistics and the China Federation of Logistics and Purchasing released the China Purchasing Managers Index. In March, the manufacturing purchasing managers index, non-manufacturing business activity index and comprehensive PMI output index were 49.5%, 48.4% and 48.8% respectively, which were 0.7, 3.2 and 2.4 percentage points lower than the previous month. The three major indexes all fell to 49.5%, 48.4% and 48.8% respectively. Below the critical point, it indicates that the overall prosperity level of my country’s economy has declined.
Recently, clusters of epidemics have occurred in many places in China, and international geopolitical instability has increased significantly, which has affected the production and operation activities of Chinese enterprises to a certain extent.
The epidemic has led to multiple factors such as the closure of parks in various places, employee isolation, road closures, and poor transportation. Judging from recent market performance, most operations in the market have implemented home offices due to the restrictions of the epidemic. According to market feedback, most processing in Wuxi began on the 1st Enterprises have also entered a state of shutdown, and there are only a handful of factories that can process. Combined with the closure of various districts in Wuxi, inquiries can be made, but arrival and delivery are limited. With the outbreak of the epidemic in many places in China, downstream demand has also slowed down significantly, and some companies have been forced to suspend work, production, and operations…
Pressure on enterprises in industrial clusters increases sharply
Downstream demand may remain sluggish
According to the latest survey conducted by the China Cotton Textile Industry Association on the operation of the cotton textile industry cluster market, affected by many factors, the production and operation pressure of cotton textile industry cluster enterprises has increased sharply.
Pure cotton yarn manufacturers reported that due to multiple factors such as repeated epidemics and sluggish downstream demand, product sales were sluggish, inventories increased, and profits declined. At present, only high-count yarns still have small profits, while medium- and low-count yarns suffer huge losses. The overall market situation has declined significantly, and customers haveWillingness to purchase is not strong. It is expected that the difficulties faced by enterprises may further intensify.
The current average operating rate of core-spun yarn cluster enterprises is around 80%. Affected by the epidemic, it is inconvenient for external customers to purchase goods at the factory, and the circulation of goods is not smooth. Raw material prices fluctuate greatly, and the costs of production factors such as water, electricity, and water continue to rise, and corporate profits are severely squeezed. It is expected that subsequent orders may continue to be weak.
Enterprises in the color spinning cluster reported that due to transportation difficulties, enterprise production mainly relies on the use of stocked raw materials. Downstream market demand continues to weaken, most companies have significantly reduced orders, and a few companies have relatively slightly better sales. Overall, the inventory of colored yarn products is lower than that of pure cotton yarn products, and the profit is slightly better than that of pure cotton yarn products. Companies say it is difficult to judge market trends in the later period.
The global economy is currently under pressure and the market is turbulent and declining. The average opening rate of gray fabric companies is less than 70%. The prices of cotton yarn raw materials and gray fabric products declined weakly. Companies generally report that orders will show a sharp decrease after the year. Some companies have encountered customer refunds and price reductions, and are currently barely maintaining production. The market outlook is not optimistic.
The recent epidemic situation is tense, control efforts have been intensified, and some yarn-dyed fabric companies have suspended work and production. Yarn-dyed fabric companies generally face problems in the transportation of raw materials and products, and insufficient production capacity. At present, the order situation is temporarily stable, but the rising costs of various types have led to high production costs for enterprises. The current status is expected to continue for some time.
Denim cluster enterprises reported that the average business opening rate was less than 90%, which was lower than the same period last year. Raw material prices fluctuate at high levels, and the pressure on corporate production costs continues to increase. Demand in the downstream market is weak, new orders are few, and orders are currently on the machine for about ten days. Companies expect downstream demand to remain sluggish.
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