Cargo density in China could deepen the chip crisis

The congestion at Shanghai Port, the world's largest port, and the reduction of air-cargo capacity at the city's main airport point to a worrying situation in terms of costs for the semiconductor industry.

According to Keelvar, a European-based firm that provides supply chain services to customers such as Samsung, Logitech, and Siemens, the shipping time from Shanghai to the US has started to take more than 2 months.

The company states that this waiting period for the delivery of chips used in almost every electronic item, from vehicles to computers, is very long and costly.

On the other hand, companies that turned to air-freight transportation to overcome the problem faced an even greater problem when an employee dealing with cargo at Pudong airport tested positive on January 24, and many flights were suspended after hundreds of people were quarantined.

Electronics costs could increase by 30 percent

According to Dylan Alperin, Keelvar Director of Service Operations, if the problem with air transportation is not resolved, transportation costs could increase threefold. Alperin said, "Companies had put their hopes in the airways to get their products out of heavy ocean transportation and Chinese ports under closure, but that didn't work either. An additional 30 percent increase in goods such as these would be very significant."

A similar incident occurred at Pudong Airport last August, and when it was determined that five workers working at the terminal were infected, the Chinese authorities decided to close the entire cargo section. Mazda Motor Corporation, which could not obtain the critical electronics necessary for production, suspended production until the cargo arrived.

According to Zencargo CEO Alex Hersham, who said, "The main problem is the problems in Pudong and other airports." Additional Covid-19 restrictions to be implemented in China may further strain the already tense supply chains.