How China’s Power Cut Increases Supply Chain Issues

Posted by Clarion Safety Systems on 7th Oct 2021

A growing power supply shortage in China has been triggering blackouts and forcing factories to cut production, threatening to slow the country's vast economy and place even more strain on global supply chains. This puts a strain on United States companies, as China is one of their leading sources of imports.

Companies in the country's industrial centers have been told to limit their energy consumption in order to reduce demand for power, state media has reported. And supply has also been cut to some homes, reportedly even trapping people in elevators.

The Causes of the Power Shortage
An unexpected and unprecedented power cut hit three northeastern provinces including Heilongjiang, Jilin, and Liaoning which has resulted in major disruptions to the daily lives of people and business operations.

Power shortages have also hit the southern province of Guangdong, a major industrial and shipping hub. Local officials have said that many firms are trying to reduce demand by working two or three days per week.

China was hit by a similar power crunch in June, but the situation is getting worse because of a perfect storm. Its industries are facing huge pressure from soaring energy prices, and from Beijing to tackle its carbon emissions.

The world's biggest polluter is trying to meet a pledge that its carbon emissions will peak before 2030. That requires its provinces to use less fossil fuel for each unit of economic output, for example, by burning less coal to generate power. This is a monumental feat as 60 percent of China’s energy is coal sourced, and the price of thermal coal has surged this year from 671 yuan ($104) per ton to roughly 1,100 yuan ($170). Adding to that, trade tensions with Australia brought China to put up barriers to importing its coal.

Shipping Delays at Home
At the same time this coal shortage is happening, the demand for Chinese-made goods has surged as the global economy emerges from the pandemic, especially as the holiday season approaches. The result: not enough power to go around.

The United States is in a precarious place right now; as it struggles from China’s delayed production times, the pandemic has also brought on an extreme shortage of workers in the shipping ports and docks. In California, workers are struggling to manage unloading the containers lining up at the shore, causing supply chain issues throughout the country for manufacturers and retailers.

This is also caused by the companies increasing the load sizes within their shipments, which in turn results in longer load times. United States’ ports have been reported to simply not be big enough for the cargo, with not enough cranes, nearby road infrastructure, or workers to handle pandemic demand surges. The hope is that this will be solved soon, although as U.S.-based manufacturing needs a constant influx of materials to make it through increasing consumer demand, the outlook is bleak until both the power and ports are operating properly again.

United States Based Production
Both the power cuts from China and the growing shipping delays at United States ports are causing substantial issues in the manufacturing and retail industries, a snowball effect has been projected to occur, with the issues rising as 2021 continues. As this evolving situation continues to change, please know that the Clarion Safety team is here to help with any challenges you may be facing related to your label, sign, tag and custom printing needs.

The bottom line: we’re completely committed to on-time deliveries and providing you with the best customer experience possible. At Clarion Safety, we take pride in having our products produced in the United States, manufactured directly from our production facility in Milford, Pennsylvania. If you need assistance with visual communication products to have in stock for your equipment needs, or across your facilities, please notify our team. We’re committed to our customers’ success and are happy to work collaboratively to ensure your company’s well-being and your supply chain stability.