Bad News for Global Supply Chain as China Faces Omicron Outbreak

Chinese authorities will be imposing new restrictions to combat the recent surge of Omicron within the country, raising fears of further supply chain disruptions globally.

According to Mi Feng, a spokesman for the National Health and Health Commission, the omicron variant has proliferated throughout China. Epidemic prevention and control have become more difficult as the current situation worsens.

In contrast to most other countries, China has a zero-tolerance approach to epidemic waves, which imposes strict lockdown measures, mass testing, and quarantines.

Five large factory cities have gone under complete lockdown, with many other cities expected to follow. Companies are encouraging employees to work from home as much as possible for the time being.

High international freight costs have also become a significant issue once again. Ports in China are demanding workers to live and work at the docks for up to two months to prevent infections. However, during persistent outbreaks, this continuation of port operations is expected to raise container rates.

The impact of the latest restrictions will be most apparent beyond China’s borders, at a time when the global economy has already been negatively affected by Russia’s war on Ukraine, skyrocketing oil prices, and weak consumer demand.