The Chinese COVID lockdowns are threatening to choke global supply chains. The effect on these lockdowns on the already lagging US ports in the coming weeks are potentially devastating. Right now, one out of five container ships worldwide is sitting in a port waiting to be unloaded, with 30% of that originating from China.
The Ports of Los Angeles & Long Beach have been infamous throughout the pandemic for their delays, and this demand that is being built up could cause massive delays once again in the near future.
CEO of global manufacturer Phipps International, Jake Phipps says, “Port delays have a direct impact on inflation. A single container shipping from China to the U.S. has increased from $5,900 to $15,764 in one year alone. It’s inevitable that this will be felt in higher costs for all consumers.”
Seanews interviewed Jake to understand the COVID lockdown situation in China going, and whether the port situation, which had been gradually improving, could potentially be overwhelmed again and cause more problems for our supply chain. The excerpts…
SN: In what aspects COVID curbs at Chinese ports threaten global supply chain?
There is massive port congestion with every factory in China trying to get their containers onto vessels through the Chinese ports. There is a massive backlog of products because of the six week delay of all ports, and trucking in the whole country being closed.
SN: What is the current situation in terms of port calls and delays in China?
Some ports are open. A lot of them are still slowly setting up and operating, while trying to get people back to work. Most are still not open, although some of my factories have opened back up depending on the city and province.
SN: What is outlook on the sailing disruptions (diversions, etc) caused due to the congestion at Chinese ports?
The bigger vessels only leave from certain ports, which can be restrictive when there are closures. The smaller vessels are trying to figure out how to get on to the larger barges. It is a huge logistical mess as a result.
SN: What impact is it going to have on the global economy in terms of figures (a rough estimate…)?
The losses are in the billions of dollars in terms of revenue loss, for public and private companies on a worldwide scale. 30-60 days of cash flows for companies are being held up.
SN: How has the US supply chain been affected, and is the industry looking for alternatives, to face such situations in the future?
The alternative would be to try to stay away from China as much as possible, and the supply chain continues to be in trouble. As soon as stability was about to come, China shut down the whole country.
SN: What are the /sectors particularly (significantly) affected due to the delays?
Consumer goods, agriculture and food industry are most being affected.
SN: How do you see the port congestion in China, coupled with Russian invasion of Ukraine, worsening the crisis?
The Black Sea has had massive issues with all the surrounding countries. No boats or ships have been operating for the past 90 days. Turkey just opened back up its ports.
