(Yicai Global) May 17 -- A sharp rise in logistics costs is posing a big challenge to Shanghai’s automotive industry players trying to get back to work as the city’s lockdown, which started last month, is eased as the Covid-19 outbreak comes under control.

Compared with April, when neither raw materials nor finished products could be delivered, the logistic bottlenecks have relaxed considerably this month, but costs have at least doubled, an executive at a car parts firm told Yicai Global.

It used to cost about CNY6,000 (USD883) to send a 9.6-meter-long truck from Shanghai to eastern Shandong province, but it now costs as much as CNY13,000 (USD1,915), another auto components supplier said.

Car shipment costs have also soared. It used to cost CNY1.30 (USD0.20) per kilometer, but now prices are about CNY2.80 (USD0.41) a kilometer and in some cases as much as CNY3, an employee at a car manufacturer said.

The price hikes are because the cost of quarantining the drivers and parking the trucks at the other end are built in. There are also other additional costs such as any damages sustained to the vehicle and its goods while it is parked.

Auto logistics firms are unwilling to accept orders in the current situation, especially when it comes to transporting expensive luxury vehicles since the potential losses are much higher, the person said.

“Carmakers are negotiating with dealers to share the additional delivery costs. But many dealers are unwilling to bear such extra costs as they are also under a lot of pressure. However, if the dealers won’t agree to it, manufacturers will not ship cars for the time being,” the employee added.

Vehicle parts suppliers are also in discussion with their automaking clients to share costs. “Big customers can use their own trucks to collect products. And at the same time they will collect the orders from other carmakers in their region. But those without such resources can’t arrange their own pick-ups,” he added.

“We are now back at 50 percent capacity, and once the lockdown eases further, we expect to rebound to 70 percent by the end of the month,” the executive said. “However, we hope the government will reduce our tax and social security burdens a bit because we are really struggling to operate,” he added.

Editors: Tang Shihua, Kim Taylor