Ships looking to avoid coronavirus-induced delays in China are making a beeline for Shanghai, causing growing congestion at the world’s biggest container port.
Shipping firms are making the switch to avoid delays at nearby Ningbo, which suspended some trucking services near that port after an outbreak of COVID-19, according to freight forwarders and experts. Ships are also re-routing to Xiamen in the south, Bloomberg shipping data showed.
Those diversions are adding to the new wave of congestion facing China’s ports as an increasing number of cities deal with virus outbreaks. The strict testing of workers and truckers ahead of the Lunar New Year holiday at the end of this month is further stressing already strained supply chains as the pandemic heads into its third year.
In the country’s technology hub of Shenzhen in the south, testing of residents and truckers to contain an outbreak means a queue of ships has formed at the port. That’s caused the Shekou terminal to start restricting the acceptance of goods, meaning that from Friday full containers can only be trucked in three days before vessels are due to arrive, the terminal operator said Tuesday.
Meanwhile, the northern Chinese city of Tianjin ordered workers to take a half-day break for COVID-19 testing as officials try to contain the spread of the omicron variant. Trucking capacity is estimated to be half of normal levels, and drivers are required to be tested daily before entering the port, said Alex Hersham, CEO of digital freight-forwarder Zencargo.
That outbreak has now spread to the port city of Dalian, with two people who traveled there from Tianjin confirmed to have omicron.
The influx of ships into Shanghai has delayed sailing schedules for container ships there by about a week, said freight forwarders. Those delays may then ripple outward to already backlogged gateways in U.S. and Europe, they said. Ships could start skipping Chinese ports soon due to a lack of options, according to Zencargo’s Hersham.
“The port congestion issue will continue to impact restocking cycles this quarter, alongside the omicron breakout and the impending Chinese New Year closures in China,” said Josh Brazil, vice president of supply chain insights at logistics intelligence firm project44.
Quarantines hurt global air-cargo growth
Global air-cargo growth slowed sharply in November as demand was hit by supply-chain disruptions, partly because COVID-19 restrictions left workers stuck in quarantine, causing labor shortages.
Demand for air freight, measured in cargo ton kilometers, rose 3.7% from the same month in 2019, prior to the pandemic, according to the International Air Transport Association. That’s less than half the 8.2% increase seen in October and significantly lower than in previous months, IATA said.
Freight has been a rare bright spot in a dark time for many of the world’s airlines, helping offset weak passenger traffic thanks to strong demand from consumers stuck at home. Economic conditions remain favorable, with China and the U.S. seeing double-digit growth in retail sales in November from two years prior, IATA noted, but clogged supply chains are pinching the business.
“The pressures of labor shortages and constraints across the logistics system unexpectedly resulted in lost growth opportunities,” IATA Director General Willie Walsh said in a statement dated Jan. 11. “Manufacturers, for example, were unable to get vital goods to where they were needed, including PPE,” he said, referring to personal protective equipment, demand for which has jumped due to a surge in Covid cases in many developed economies.
IATA, which represents about 290 airlines, called on governments to swiftly address supply-chain pressures, including taking steps to ensure aircrew operations aren’t hindered by Covid restrictions designed for travelers and providing policy incentives to address labor shortages.
Logistics snags also continue to affect sea transport. Containers spent five days on average at Chinese depots last year, compared with 61 days in 2020, which illustrates maxed-out capacity and pressure on the supply chain, according to a study by Germany-based Container xChange and Fraunhofer-CML.
While containers are moving in and out of China at record speeds, port congestion in the U.S. and Europe is slowing their return to Asia and hampering the recovery of global ocean supply chains, the study found.
“As the omicron variant brings more disruption, with Chinese New Year around the corner and some ports including Ningbo already facing lockdowns, we are expecting a volatile start to the year for ocean freight logistics,” Container xChange Chief Executive Officer Johannes Schlingmeier said in a statement.