Ship congestion in China

Ship congestion in China

The delta variant of the corona virus is again causing problems for China. After a Corona outbreak, two important ports are closed again, and the global exchange of goods is once again at a standstill. China is not the only country to experience major shipping congestion outside its ports. by Dirk Mewis

More and more ships are jamming at two leading container handling ports in China following the closure of a terminal due to a Corona outbreak. The situation at the ports of Shanghai and Ningbo Zhoushan worsened after the Meidong terminal in Ningbo Zhoushan stopped loading and unloading cargo on Wednesday. Data from information provider Refinitiv showed that Ningbo Zhoushan already had 40 container ships waiting at an outer anchorage of the port on Thursday. On Wednesday, the number had been as low as 28 ships at times.

Tighter restrictions to contain the recent Corona outbreak are now gripping more and more sectors of the country’s economy. The highly contagious Delta variant has already been detected in more than 12 cities since late July. Ningbo Zhoushan is China’s second-largest container port after Shanghai and was formed years ago by the merger of the Ningbo and Zhoushan ports. As congestion grows, so do concerns about further disruptions to global supply chains, as ship congestion also increases off the ports of Rotterdam and Los Angeles.

Restrictions have been imposed on other terminals at the Port of Ningbo Zhoushan in terms of the number of people and cargo entering the port areas. Shipping company CMA CGM informed that some ships would also be diverted to Shanghai. That port is now experiencing the worst shipping congestion in at least three years. According to data from Refinitiv, 30 ships are now waiting there outside the important Yangshan container terminal. As recently as June, there had been massive disruptions in the handling of container cargo in southern China after ports implemented stricter corona measures.

Shipping company expects global aftermath

Now container shipping is again suffering from a backlog. According to the world’s largest shipping company, Maersk, it might not clear for “several weeks.” Due to the backlog at the Chinese port of Yantian in the commercial metropolis of Shenzhen, there are significant delays, according to Maersk. In addition, the consequences of the Corona pandemic are still having an effect, which led to chaotic situations in the freight business. For example, in many cases containers were missing after the temporary slump in world trade, stranded in the wrong ports.

The situation at Yantian Port exacerbates these problems. “It was already difficult to find containers before,” explains Alfred Wong, head of Shenzhen-based D&S Products Manufactory. Now, he says, the situation has become “even more frightening.” For the internationally interlocked supply chains and global trade, the traffic jam means a new test of endurance, after the container ship “Ever Given” blocked the Suez Canal and thus imports from Asia for days at the end of March because it had crossed the shipping channel.

In 2020, the Yantian port handled some 13.3 million 20-foot standard containers for foreign trade. According to Japanese financial firm Nomura, that accounts for more than ten percent of China’s foreign trade container throughput. Due to a new Corona outbreak, the Chinese port of Shenzhen-Yantian was also closed recently, with a good 80 ships temporarily waiting in the roads to handle cargo. Otto Schacht, head of ocean freight at logistics group Kühne + Nagel, alerted his customers via LinkedIn in mid-June: “Just in time is not working at the moment.”

At the same time, shipping capacity supply could decrease due to CO2 pricing, because as long as new climate-neutral propulsion technologies are in the pipeline, curbing travel speeds is considered the most effective measure to avoid emissions. For container traffic, this would mean longer turnaround times, less availability. At shipbroker Howe Robinson, a recent report also says that the recovery of the global economy and logistical bottlenecks have catapulted freight markets upward. CO2 emissions regulations ensured that they will stay there for now.

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