After facing a shortage of coal, now China is facing a shortage of diesel that is causing a nationwide problem in the supply chain. As per a report by Caixin, a Chinese business news service, a cap of 100 litres per truck has been imposed in many parts of the country, which is only 10% of the original capacity. Some reports have suggested that the cap is even lower in some parts of the country where the drivers can only fill the tank with 25 litres of fuel.
Notably, the factories in China have been running diesel-fuelled generators to power their machinery amidst a severe shortage of coal and natural gas for the past few weeks. The shortage of coal is so severe that factories and households in China have been facing long power cuts. As a result, the excessive use of diesel for localised power generation has now resulted in a shortage of diesel across the country. Anything that disturbs China’s local supply chain brings more trouble for the already-affected global supply chain.
According to a report by BBC, posts have emerged on Chinese social media platform Weibo that claim some truck drivers have to wait for days to refuel their trucks. Mattie Bekink, China Director at the Economist Intelligence Unit, said, “The current diesel shortages seem to be affecting long-distance transportation businesses which could include goods meant for markets outside of China.” He further added such a crisis for long-duration would add to the woes of the global supply chain.
To add to the crisis, there is an additional charge applied on the purchase of fuel if the driver wants to fill up the truck’s tank. Caixin reported that the fuel stations are charging up to 300 Yuan or $47 additional for filling up the tanks. A truck driver said, “I have never seen anything like this,” while referring to the surcharge over fuel price. Chinese government’s mouthpiece Global Times quoted an employee from a gas station in Shijiazhuang, Hebei, “Each customer can only buy a fixed amount because there isn’t enough at the moment.”
China’s Coal Crisis
In September, it was reported that China was facing a severe coal shortage leading to a major dip in power generation. The reports suggested that the power outage affected most of Eastern China, where the majority of the population lives. At least 17 provinces in recent months faced blackouts. Experts linked the crisis to economies opening worldwide that led to a shortage of coal for power generation. The situation was grim enough to force Apple and Tesla to halt production in their China-based factories.