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Port congestion grows as China’s capital braces for Shanghai syndrome

Familiar scenes of supermarket stampedes are emerging from the Chinese capital as mass testing gets underway in Beijing, the latest mega city to face the tough wrath of the country’s dogged zero-Covid policy.

Port and hinterland snarl-ups across the world’s most populous nation are wreaking havoc for manufacturers and logisticians alike.

While Shanghai has been grabbing the most headlines for its near-month-long lockdown, similar municipal closures are widespread across the People’s Republic. Data from research company Gavekal Dragonomics shows that as of April 20 57 out of China’s top 100 cities by GDP have relatively strict restrictions in place.

“Comments by senior automotive and electronics company executives suggest manufacturing in those industries could grind to a halt across the country if severe restrictions in Shanghai and surrounding cites do not lift by May. The prospect of escalating costs for such key industries may prompt local officials in the region to attempt more desperate solutions to keep factories humming if stringent lockdowns drag on into May,” a recent report from Gavekal Dragonomics stated.

Andrea Huang, a senior director at supply chain platform Overhaul, told Splash that based on current trends, the lockdowns will not begin to ease until early or mid-May at the regional or district level with the ripple effect of Covid lockdowns extending into June or even further into the summer. Huang said that as Shanghai and other coastal cities reopen, container shortages will increase shipping costs.

Container port congestion at Chinese ports remains elevated with waiting times at Ningbo rising to up to seven days, according to analysis from Linerlytica, but Shanghai wait times remain at less than two days as cargo volumes have been significantly curtailed.

Imported containers are waiting on average for 12.1 days at Shanghai’s port before they are picked up by truck and delivered to destinations inland, according to supply chain data provider project44. The rate for April 18 was almost triple the 4.6 days on March 28.

While much of the reporting on China’s ongoing series of lockdowns has focused on container shipping, the strict actions dictated by the Xi Jinping administration are also having a significant impact on dry bulk too.

Excluding Shanghai, the top four coastal provinces with the largest Covid outbreaks in 2022 are Shandong, Zhejiang, Fujian and Guangdong. These four provinces represent about 50% of China’s dry bulk imports, new research from brokers Arrow shows.

The Covid outbreaks in these provinces and the resultant restrictions have driven dry bulk congestion higher over the past month.

“The effects of a lockdown cascades through the supply chains, and therefore congestion may linger for a while,” analysts at Arrow suggested in a new report published yesterday, adding: “Peaks in Covid cases have typically coincided with peaks in congestion, and we don’t see why it will be different this time around.”

As for tankers, the fallout has been a clear drop in cargoes. Latest information from China suggests that lockdowns have curbed domestic oil demand by 7% or almost 1m barrels per day over recent weeks, according to a new report from BRS.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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