With Shanghai experiencing an increase in COVID-19 cases in recent weeks and mass testing currently underway, the trade press are raising the spectre of a city-wide lockdown and the supply chain chaos that may ensue.
It’s only been five weeks since China’s biggest city emerged from its two-month lockdown and the press are suggesting that mass testing has generally been the precursor to further restrictions in China.
This latest Covid scare comes at a time when China’s ports and supply chains are already under pressure, so there is understandable concern that widespread lockdowns will result in further congestion in already strained ports, just ahead of peak season.
Our colleagues in Shanghai confirm that there are localised short-term lockdowns and testing currently underway, in a number of districts, but we are not experiencing any issues moving sea or air cargo and our team think that a series of mini-lockdowns, that concentrate on specific districts, may be more likely, which would be less disruptive to supply chains.
There is some congestion at Ningbo, due to bad weather and Qingdao has also been impacted by the weather, with waiting time of 48 to 96 hours.
We note that the average waiting time for vessels to berth at Shanghai was also up, from 12 to 24 hours and worsening congestion increases delays and the likelihood of blank sailings, which puts pressure on capacity.
High freight rates are caused by lack of capacity and lack of capacity across Asia, Europe and the USA is caused by vessels waiting, which is in turn caused by port congestion. If rates are to normalise, port congestion must end and cargo lead times normalised.
Our Shanghai team (and offices across China) will continue to monitor the evolving situation closely and we will ensure that you are first to know of any significant developments.