Following through on its “zero covid” policy, the Chinese government implemented widespread lockdowns that are having a ripple effect on the global economy.
“Only by adhering to such an effective containment policy, can China tackle the epidemic situation immediately upon detection of cases, preventing mass infections, severe illness, and deaths, and avoiding straining medical resources,” China’s official Xinhua news agency stated.
In another country, the number of people infected by the so-called “stealth Omicron” strain would not result in Draconian mandates. Data released on March 15 indicates 1,860 symptomatic infections and 1,338 asymptomatic ones against more than 1.4 billion citizens. Other reports peg the number of infections at approximately 15,000. However, China had upwards of 45 million people locked down in mid-March.
The Chinese Communist Party made the decision long ago that zero tolerance was key to their population. That’s largely because China reportedly possesses fewer hospital beds than many other industrialized countries. Its population also has upwards of 15 million unvaccinated people over 80 years old. Although the infections do not appear to be a harbinger of things to come in the U.S., America’s freight hauling industry is already feeling an impact.
Diesel prices are expected to dip, if they haven’t already, along truck routes due to reduced oil demand. On Match 15, the Wall Street Journal explained how the Asian health policy impacted owner-operators and fleets.
“New Covid-19 lockdowns in China dragged oil prices back below $100 a barrel, casting fresh uncertainty on a global economic expansion hamstrung by the war in Ukraine, rising inflation and the end of stimulus,” the Wall Street Journal reported. “New York oil futures dropped 6.4 percent on Tuesday, extending their decline over the past week to more than 22 percent. Last week they exceeded $130 a barrel for the first time since the financial crisis….”
Prices at the pump are expected to remain relatively tame while China roots out Omicron in an effort to slow the spread. By that same token, the lockdowns are occurring in some of the country’s key manufacturing and export hubs. When news media talk about the upwards of 17.5 million people in the Shenzhen area staying home from work, that also has a direct and discernable effect on neighboring Hong Kong.
Both Shenzhen and Hong Kong rank among the world’s top 10 largest container ports. And Shenzhen is home to major iPhone assembly plants, among others businesses. Foxconn, an assembler for Apple, reportedly shut down its operation in compliance with government mandates. That’s one example of imports going into pause mode while China sorts out the latest health and safety crisis.
Truck drivers and fleet operations can expect diesel cost relief and a dip in Asian imports while China remains in a heightened health crisis. But demand for diesel and gasoline will likely rise as people get back to work and manufacturers ship products to the U.S.
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