Shanghai’s turbulent Covid-19 situation, which has caused severe supply chain issues, appears to be spreading and causing bottlenecks in other places in China. A solution could be far away.
The lockdown in Shanghai, which affects the world’s biggest container port, increases bottlenecks other places in China. | Photo: Hector /Ritzau Scanpix
The logistics chaos which for weeks has characterized the world’s biggest container port in Shanghai appears to be spreading.
Even though the problems have never been directly linked to operations in the port terminals but have centered around logistics to and from the port, the number of canceled sailings is now starting to increase, says container analyst and Vespucci Maritime CEO Lars Jensen to WPO.
”The problems in Shanghai have never been about the port but rather the in-land logistics. Because lockdowns have been effective for so long, people are desperately looking for alternatives, thus trying to move cargo to other ports and place orders outside Shanghai. That increases pressure in other places, and this is starting to show in the shape of increased bottlenecks,” he says, referring to Ningbo, among other places.
Plans may slide
Although Shanghai’s container port has not been closed, crew shortages and demands that drivers be tested have strained efficiency and transportation in and out the terminals.
Because lockdowns have been effective for so long, people are desperately looking for alternatives
LARS JENSEN, CEO, VESPUCCI MARITIME
According to French container carrier CMA CGM’s latest update, it is the labor challenges in the terminals that cause the biggest problems.
”[The port in Shanghai, -ed.] remains impacted by increased stress on labor availability and ships waiting time but mainly in terminal #2,” reads the announcement.
Maersk also warns its customers that the entire land-based business may become subject to change, the carrier writes in an update Tuesday.
”There is no visible end to the situation right now. When one works with zero tolerance and an Omicron variant, I really can’t see there being any outlook to an approaching normalization,” states Jensen.
Ketchup effect
The supply chain problems have also prompted concern and uncertainty among major Danish companies such as GN Audio and Pandora, which, for instance, struggle with long delivery times.
Photo: AP/Ritzau Scanpix
”Our Chinese business is basically one big question mark right now. And it will continue to be so until the zero-tolerance policy in China is changed,” says Pandora CEO Alexander Lacik to Danish media Børsen.
According to Maersk CEO Søren Skou, there is a risk that the lockdowns in China may result in another crisis on the already strained global transportation market.
”What we have seen previously in the case of lockdowns in China is that the orders made by all types of retailers not just disappear because the country shuts down. They will be delivered at a later time. When the factories reopen, there will be a ketchup effect, but we are not there yet,” said Skou last week in relation to Maersk’s quarterly report.
