China, home to about a third of global manufacturing, is imposing sweeping lockdowns in an attempt to keep the Omicron variant from coming.
The measures have restricted tens of millions of people to their homes in several Chinese cities and contributed to a suspension of connecting flights through Hong Kong from much of the world. About 1.5 percent of China's population is in a state of lock down, mostly in the city of Xi'an in western China and in the province of Henan.
The country has a zero-tolerance policy that has manufacturers worried about another round of shutdowns at Chinese factories and ports. It is a particularly fraught moment for companies, which are struggling with rising prices for raw materials and shipping along with extended delivery times and worker shortages.
China used a number of measures to stop the spread of the coronaviruses after it first appeared in Wuhan. The extreme transmissibility of the Omicron variant poses the biggest test yet of China's system.
The effects of Chinese factory production and deliveries have been limited so far. Four of China's largest port cities have imposed narrowly targeted lockdowns to try to control small Omicron variant outbreaks. The cities had not locked their docks. Volkswagen and Toyota said last week that they would be suspending operations in Tianjin.
Many industries could face disruptions in the flow of goods as China tries to stamp out any coronaviruses infections ahead of the Winter Olympics, which will be held in Beijing next month. Beijing officials reported the first case of the Omicron variant on Saturday, prompting the authorities to lock down the person's residential compound and workplace.
Supply chains in the United States could be affected by the effects of more widespread lockdowns in China. The Federal Reserve and the Biden administration are facing challenges because of the high inflation and consumer confidence that could be caused by major new disruptions.
Craig Allen, the president of the U.S.-China Business Council, said that the question is important. If they have to close down port cities, you will have more supply chain disruptions.
The potential for setbacks comes just as many companies had hoped to see some easing of the supply chains that have been snarled by the Pandemic.
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The port is in Shenzhen, China. Four of the country's largest port cities, including Shenzhen, have imposed targeted lockdowns to try to control small outbreaks of the Omicron variant.
The global delivery system has been thrown out of whack by the combination of intermittent shutdowns at factories, ports and warehouses around the world. The cost of transportation has gone up, and ports and warehouses have had to deal with pileups of products waiting to be shipped or driven elsewhere.
Customers were able to circumvent the challenges by ordering early. After the holiday rush, high shipping prices began to ease, and some analysts speculated that next month's lunar new year might be a time for ports, warehouses and trucking companies to catch up on moving backlogged orders and allow global supply chains to return to normal.
The spread of the Omicron variant is foiling hopes for a fast recovery, highlighting how fragile the supply chain remains within the United States.
American trucking companies and warehouses are short of workers and are losing them to sickness. There are empty shelves in American supermarkets because of weather disruptions. Flexport said delivery times for products shipped from Chinese factories to the West Coast of the United States are as long as ever, with a record high of 113 days in early January. At the beginning of the year, that was less than 50 days.
The Biden administration has taken a number of steps to try to alleviate some of the problems in the United States and abroad, including spending $17 billion to improve American ports as part of the new infrastructure law. Major U.S. ports are handling more cargo than ever before and working through their back up of containers, in part because they have threatened additional fees for containers that sit too long in their yards.
There are still problems at other stages of the supply chain, including a shortage of truck drivers and warehouse workers. A push to make the Port of Los Angeles operate 24/7., which was the centerpiece of the Biden administration's efforts to address supply chain issues this fall, has still seen few trucks showing up for overnight pickup, according to port officials.
The labor contract for more than 22,000 dockworkers on the West Coast is due to expire on July 1. Work slowdowns and shipping delays were caused by previous negotiations.
Phil Levy, the chief economist at Flexport, said that if you have four closed doors and one opens, that doesn't mean quick passage. If our ports become 10 percent more efficient, we can solve the problem.
Chris Netram, the managing vice president for tax and domestic economic policy at the National Association of Manufacturers, said that American businesses had seen a succession of supply chain problems since the beginning of the Pandemic.
He said that the port snarls could be the next flavor of the challenges, and that Chinese lockdowns could be the next one.
If Omicron spreads in the coming weeks, more factories and ports in China might be forced to close.
The economy of both Xi'an and Henan Province is not heavily reliant on exports, although the latter does produce some commercial aircraft components.
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The problem was caused by the Pandemic. The global supply chain is in turmoil. The outbreak of Covid-19 caused an economic downturn, mass layoffs and a halt to production. Here is what happened next.
A decrease in shipping. With fewer goods being made and fewer people with paychecks to spend at the start of the Pandemic, manufacturers and shipping companies assumed that demand would drop sharply. Demand for some items would surge as a result of that mistake.
There was a spike in demand for protective gear. In early 2020 the planet needed surgical masks and gowns. Most of the goods were made in China. Cargo vessels began delivering gear around the globe as Chinese factories increased production.
There was a shipping container shortage. The containers were emptied and piled up around the world. The shortage of containers in China was caused by the result of a shortage in other countries.
The demand for durable goods increased. The spending shifted from eating out to online purchases as a result of the Pandemic.
Strained supply chains. Factory goods quickly overwhelmed U.S. ports. The cost of shipping a container from Shanghai to Los Angeles went up tenfold because of swelling orders.
Handel Jones, the chief executive of International Business Strategies, said that the impact on the two companies would be limited, but he was worried about the potential for broader lock-ups in cities like Tianjin or Shanghai.
He asked if the city of Xi'an was a template for other cities in China. If they can't control it in the next two or three weeks, you could have a big impact on the supply chain. It is kind of the tipping point right now.
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Volkswagen and Toyota said they would temporarily shutter operations because of the lock downs.
The Chinese authorities are experimenting with more narrowly targeted lockdowns. A Chinese student who had recently returned from the United States visited a milk tea shop in Shanghai that had identified five Covid cases. Emergency restrictions were put on the shop itself rather than locking down the entire city.
The chairman of a Hong Kong-based container shipping line said that Chinese ports have slightly reduced their efficiency due to social distancing rules.
Chinese docks have been able to operate through municipal lock downs after a lot of disruptions last year. They have banned ship crews from coming to the dock and have required some dock workers to live in nearby dormitories for weeks at a time to prevent infections.
Athletes and other foreigners will be completely separate from the population during the Winter Olympics in China. Beijing traffic authorities have told residents to stay away from any vehicle accidents involving Olympic participants.
The world's third and fourth-largest container ports by volume were both affected by terminal shutdowns last year.
If the coronaviruses enters a big port again, the effects could be felt in the US. Mr. Huxley said that a big back-up would develop quickly if one of the big container terminals went into lock down.
Airfreight could become more expensive and harder to obtain in the coming weeks as China cancels dozens of flights due to a potential infectious disease. Consumer electronics companies tend to ship high value goods by air.
There may be another scramble to secure Chinese-made products for American companies if there is more supply chain troubles.
The supply chain issues were putting pressure on companies like hers to get products on the shelves faster than ever, with retailers asking for goods for the fall to be shipped as early as May.
Dr. Williams, who was an academic specializing in logistics before she started her company, said an increase in the price of petroleum and other raw materials had pushed up the cost of the materials her company uses to make dolls. Her company has turned to more expensive airfreight to get some shipments to the United States quicker.
Everyone is anticipating the delay with supply chains so everything is being moved up. That reduces everything. It reduces the amount of time we have to think about innovations we want to do.
Both Ana and Keith reported from Beijing and Washington.
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