Chinese residents continue to battle the Omicron and Delta variants of the coronavirus while the country clings to its Zero-COVID protocols. As cases rise, China finds itself once again amid lockdowns and supply chain issues. Factories in major Chinese cities are closed. Shipments aren’t being moved in and out of Chinese ports. And the effects are trickling into other parts of the world.

Regions of the world that have already dealt with shortages of toilet paper, paper towels, cleaning products, and microchips are bracing for more disruptions. Once again, many of the products that define everyday lives are in short supply, and COVID is to blame. The experts say we shouldn’t expect things to improve in the short term. The supply chain might not get back to normal for another two years.

Zero COVID

China has prided itself in attacking the coronavirus and stopping it in its tracks. As small cases creep into busy Chinese cities, those cities spin into lockdown mode, closing factories, essential businesses, and indoor dining establishments. 

In 2020 and 2021, Chinese factories were allowed to operate under COVID Zero restrictions. But now, government officials aren’t sure how many places have to be closed to stop the spread of these two contagious variants. 

The first Coronavirus-related lockdown in the world began on January 23, 2020, in the Chinese city of Wuhan. Wuhan was ground zero for the first COVID infections in the world. Eleven million people isolated inside their homes as the pandemic grew. The restrictions were so severe that most people could not leave their homes for medical treatment for COVID or other medical disorders. Symptomatic people moved to temporary quarantine areas. Activists who spoke out against the lockdown were detained or, in some cases, disappeared entirely. The Wuhan lockdown of 2020 lasted for 76 days.

Locking Down Xi’an

In late December of 2021, Chinese officials ordered the most extensive lockdown since the early days of the virus in Wuhan. This time the western city of Xi’an and its 13 million people went inside. Each family has been allowed to designate one person to leave every other day to bring back essential supplies. The Xi’an lockdown has tightened restrictions at borders and ports. It’s an effort to keep infected people from entering, but it is also affecting the flow of goods in and out of the region.

Throughout the global pandemic, the Chinese government has been razor-focused on eliminating cases of COVID. It is the only country trying to eradicate the virus. When cases pop up, China responds with targeted lockdowns, mass testing, and contact tracing protocols.

China has been protecting its residents with vaccines like CoronaVac and Sinopharm. They are domestically made vaccines in wide use. The vaccines used in the United States are not approved in China. 

Even with a Zero COVID policy, China is still dealing with the spread of the current Delta and Omicron variants. There are reports of university students returning after winter break with positive diagnoses. And officials worry about the upcoming Olympic Games in Beijing in February and what that means to the zero-tolerance policy for COVID infections.

Samsung and Micron factories in Xi’an have ceased manufacturing due to COVID outbreaks. That can only intensify a microchip shortage that has played out through the pandemic. The chip shortage spawned a lack of brand new cars. Some manufacturers have responded by eliminating features like heated seats to save those chips for use elsewhere in new vehicles. A chip shortage impacts products of many different kinds of electronic devices and cars.

Bank of America economists warn that China hasn’t seen the worst of the latest outbreaks and the Omicron variant. Time will tell what the case numbers mean to the supply chain.

Port Problems

In the Chinese port city of Ningbo, COVID lockdowns are reducing shipping traffic to a crawl. The port is so congested that it is challenging to move shipping containers in or out. Some companies are trying to re-route traffic to the Port of Shanghai. But that port is already congested with its COVID complications and delays. Like many ports around the world, ships are spending idle Time in the water loaded down with cargo that needs to be delivered.

There are also trucking service disruptions in Ningbo, in East China’s Zhejiang province. Several COVID positive cases in that area, so authorities suspended most trucking services and work stopped at yards and warehouses around the port. Many schools, warehouses, and factories closed, and container ships sat off the coast waiting to pull into port. Ningbo is an integral part of the supply chain that moves goods out of East China’s factories and connects them with the U.S. and European consumers looking for cars, toys, and machines. Slowdowns mean disruptions in delivering these goods around the world. Ningbo was at the center of supply chain disruptions when the port closed for several weeks in August 2021.

Labor Shortages

China and many nations worldwide continue to operate in the grip of national labor shortages. There aren’t enough truck drivers, airplane pilots, supermarket shelf stockers, or other frontline workers to keep the supply chain healthy. Weak spots in the chain lead to shortages on store shelves.

China’s labor problem is partly because of COVID disruptions and partly because of perceptions by potential employees that blue-collar jobs are for the poor and uneducated. The human resources company China International Intellectech reports that 70 percent of Chinese businesses deal with labor shortages. The shift means there won’t be enough office jobs for all the people looking for them while the manufacturing sector will be short tens of millions of employees. Experts say an aging Chinese population is also contributing to labor shortages. 

Every manufacturing-related job that goes unfilled contributes to a slowdown in the global supply chain.

The Just-in-Time Supply Chain

The Just-in-Time Supply Chain Model has been popular with many companies. But the COVID pandemic has revealed why it is such a fragile business model.

Just in Time, or JIT, was developed by Toyota in the 1970s and adopted by Dell in the 1990s. It’s a supply chain model that moves goods right before they are needed. Companies like it because it reduces the number of items taking up warehouse space. JIT relies on each piece of the supply chain working closely with the steps ahead and after it. The idea is that every part of the manufacturing process is perfectly synchronized and delivered just in time. This method helps eliminate warehouses full of obsolete products.

The pandemic illuminated what could go wrong with the JIT model. In the early days of 2020, demand for paper towels, toilet paper, and cleaning products skyrocketed. Companies couldn’t pivot quickly enough to manufacture what consumers wanted, and in many cases, they couldn’t get the raw materials they needed to make the items. Often those raw materials are made into other pandemic-specific goods like personal protective equipment or PPE. Shortages of truck drivers getting goods from one place to the other and ports shutting down because of COVID cases only increased the global pressure on the supply chain. Lockdowns moved from region to region, forcing companies to change strategies on a dime to get what they needed.

Responding to China’s Supply Chain Problems

So how are companies responding to the supply chain problems rooted in COVID and China? Many American businesses are rethinking their single-source policies. It’s not just risky to source any component only from China. It’s dangerous to source anything that only can come from one place in the entire world. Company executives are now looking to source items from more than one place so that there is always a backup manufacturer and maybe even two or three of them. Companies say they aren’t leaving China and never looking back. Instead, they are adding to their rosters and expanding their possibilities.

As we head into the third year of the pandemic, consumers are well-versed in what supply chain disruptions look like. From empty car dealership parking lots to empty grocery store shelves, a culture that buys anything at any time continues to adjust to what consumerism looks like now. Any single day can bring a shortage of cream cheese bricks or a shortage of electronic devices. Experts say these disruptions aren’t going away soon. 

As long as China employs lockdowns and work stoppages in its quest to get to Zero COVID, consumers worldwide will be facing shortages of different goods and materials. Many American companies are now rethinking and reducing their dependency on China to get them what they need to produce a final product. Newer and more contagious variants of coronavirus continue to emerge, and so do new problems with the supply chain. It will take time to battle back the pandemic and fix the supply chain from China.

For two years the world has been navigating the COVID virus and that isn’t changing anytime soon. Every day presents new challenges that companies and consumers must face as they navigate a new normal and eventually a world that isn’t disrupted by COVID.