Recently we have reported on the disruptions to the supply chain being caused by issues at ports in China. Today worldwide media networks, such as the ABC, BBC and Reuters, are running lead stories about the impact of China’s newly declared lockdowns.
China’s financial hub of Shanghai is going into a phased lockdown as the country doubles down on its zero-Covid policy, after reporting a new daily record for infections. Shanghai’s public transport has been suspended and firms and factories in the city have been ordered to halt operations or work remotely.
The lockdown will take place in two stages, starting on Monday with the eastern side of Shanghai, which includes the city’s financial centre, port and airport. Manufacturing and cargo transport in Shanghai is expected to grind to a halt as a result.
For the duration of the lockdown, it is being recommended that shippers of ocean freight consignments use Ningbo port, especially for LCL shipments that need to go through a CFS.
It will be nearly impossible for shippers to access Shanghai Pudong Airport (PVG), Yangshan and Waigaoqiao container ports and any surrounding warehouses. PVG and most co-loaders recalled part of their staff to stay at the airport and, although it is still operational, magnetic inspection service will be stopped until 01 April.
The lockdown comes amid surging port congestion across China, which has already been causing cargo delays. Cross-border trucking with Hong Kong is also affected, with capacity limited and long waiting times. Many goods for cross-border are now transported by ocean due to limited truck capacity. Warehouses in Hong Kong have reduced capacity for cargo handling, causing delays for handling and loading.
Other parts of China were also suffering cargo disruption due to Covid restrictions. In Beijing, for example, the time limit for trucks from other regions to enter the capital has been extended. This week there are 262 vessels waiting in queue outside Shanghai and Ningbo, up from 243 last week.
Last week there were approximately 174 vessels anchored or loading off southern Chinese hubs at Shenzhen’s Yantian and Shekou container terminals – the largest number since Oct. 21, when the region dealt with the aftermath of Typhoon Kompasu. Ocean load volumes through Yantian have plunged by 43% since the beginning of March, despite the terminals staying open during the lockdown.
Technology hub Shenzhen is the second-busiest port next to Shanghai – and the world’s fourth busiest in terms of container throughput – so a significant volume shift to the other ports within China is expected. Several container ships are sitting idle outside the Port of Shenzhen right now, as more vessels arrive to be loaded.
The latest round of lockdowns in mainland China has been a major setback to global supply chains, which have been slowly recovering from the initial impact of the virus that upended global trade and transport two years ago. In fact, prior to this new disruption, carriers such as Maersk and Hapag-Lloyd were predicting that schedule reliability (and rates) would improve in the second half of the year. Instead, ocean carriers are now assessing the impact on the use of their vessels and are looking at holding ships or blanking sailings until they can see an opportunity to achieve full load factors.
