Covid outbreak at Chinese ports further hit global shipping operations

Global shipping has been interrupted for several months due to the epidemic, and demand for Asian goods from western countries has exceeded exporters’ ability to ship containers overseas. But at Yantian Port in Shenzhen, one of the world's major container ports, the recent Covid outbreak has made the situation worse. At the beginning of this month, the capacity to handle containers at Yantian Port dropped sharply. The port announced that as of June 24, the overall operation of the Yantian International Container Terminal has been fully restored; however, its current operation is 30% lower than the actual capacity.

Maersk, the world's largest container shipping company, said in a statement: "Several weeks after the Shenzhen Yantian Port was severely congested due to the Covid, supply chain disruptions are still common in global trade.” Due to the fact that it takes 16 days to dock at Yantian Port, and container ships waiting for cargo to North America, Europe, and other places had to berth outside Shenzhen and Hong Kong. Exporters tried to bypass the delays caused by Yantian. Small ships with their own cranes have transported many containers directly from riverside factory terminals in the Pearl River Delta to container ships near Hong Kong.

In terms of the impact of the outbreak in southern China’s ports on global trade, taking into account the rapid recovery of the world economy, the shortage of containers, and soaring transportation costs, it may intensify inflation and lead to global shortages of goods. At present, there have been 150 Covid cases in Guangdong Province, and most of them have occurred in Guangzhou. The lockdown measures have caused serious disruptions to the city’s large ports. Based on this, the outbreak in neighboring Shenzhen Yantian Port has exacerbated this problem, and transportation costs in the supply chain have risen sharply.

Flavio Romero Macau, a senior lecturer in business and supply chain expert at Edith Cowan University in Perth, said that the shutdown of terminals in China is usually not a serious problem. But combined with other factors, as shipping companies recover costs, the prices of manufactured goods and bulk commodities may rise sharply in the next three to five years.“ In fact, before the latest outbreak in China, there was already a shortage of capacity and a shortage of containers, coupled with the congestion of the Ever Given Suez Canal in March this year, which made the market worse.

Some ports in Guangdong, including Yantian, Shekou, Chiwan, and Nansha, have banned ships from entering the port without advance reservations and only accept bookings for export containers within three to seven days before the ship’s arrival. Maersk, the world's leading container shipping company, said the estimated delay at Yantian Terminal has been extended to 16 days from the previous 14 days. Hapag-Lloyd Communications Director Nils Haupt said: “One of China’s largest ports has basically been closed for nearly three weeks. There are some berths in operation, but they are far from enough. Ships are being transferred to other ports such as Hong Kong, but this is not enough. There is a backlog of problems."

The congestion at Yantian Port has a negative impact on the schedule rate and container availability. According to an announcement issued by Maersk on Tuesday, Yantian International Container Terminal (YICT) continues to face more than two weeks of ship berthing delays, resulting in subsequent ship berthing delays. At present, many flights have suspended calls to Yantian Port, and have changed calls to Shekou, Nansha, and Hong Kong. The transfer of flight calls has also caused these ports to face certain port congestion pressure, with longer waiting times for ships and limited entry time.

The congestion at Yantian Port has currently affected most of the global routes. Fortunately, there are signs that the port’s productivity is improving. The overall operation of Yantian Port has recovered to nearly 70%, and the yard density has dropped to 70%, although it will take several weeks to resolve the backlog of boxes.

Source: Sofreight, China XiaoKang, XinDe HaiShi


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