A surge in Covid-19 infections has taken a toll on the consumer electronics items’ manufacturers in China. Several manufacturers of consumer electronics, including smartphones, have been forced to cut their production by 10-30% due to the closure of ports and airports following Covid-19 restrictions.
This has led to supplies of components being hit ahead of the key festival season in India. Almost 60-70% of the components used in electronic goods manufactured in India are sourced from China.
Impact of the Covid-19 curbs
The curbs and closures of airports and ports have also led to freight costs shooting up by 40-50% and almost doubling over the last three months. The companies have said that they are bound to hike prices. The cargo operations at Shanghai’s Pudong international airport were shut indefinitely on August 20 after a few cases of Covid-19 were detected and a quarantine policy was put in place by Shanghai International Airport Services, the airport’s ground-handling company. The Meishan container terminal at Ningbo-Zhoushan Port in China has also been shut.
Industry executives opine that these closures and suspension of operations are happening due to China’s zero-tolerance policy related to Covid-19 cases in ports and airports.
As per media reports, at least 15 airports and ports across China are functioning at 30-70% capacity this month. These airports and ports also include the major ones in Beijing and Xiamen. Owing to quarantine policies, there has been massive congestion at other ports and airports like Shenzhen and Hong Kong, where ships have been waiting for days and airlines are cancelling their flight operations.
Things uncertain ahead of the festive season
Meanwhile, the United States and Europe have stepped up imports from China ahead of the holiday season in the coming quarter. As per executives, this surge in imports comes at a time where there is already a shortage of components like TV panels and semiconductor chips. They added that logistic companies have specified that shipping lead times would be 60 days, almost double and container charges have spiked to a record high of five to six times since the pandemic began.
Industry executives said logistics companies have already indicated that shipping lead times will double to 60 days while container charges have surged to a record high of five-six times since the advent of the pandemic.
Since December, the prices of most electronics, like smartphones and laptops have increased by 10-20% owing to a hike in component and commodity prices. Companies on one hand expect the sales during this festive season to exceed the same as last year but are also scared of shortages impacting the complete realisation of this surge in demand. Money9.com