Key Points
- As China pushed ahead with its zero pandemic strategy, the recent spike in infections has raised an alarm, causing lockdowns and curbs in the world’s largest ports.
- Some of China’s major ports have been facing an extensive backlog due to COVID spread, resulting in lockdowns and restrictions that lead to quarantines. All this has caused chaos, thereby pushing up the air freight, in some cases by almost 50%.
Just before the stretched lunar new year vacations in China, air freight rates have gone up, leading to some shipping companies suspending their services temporarily, therefore putting the spotlight on the already stressed supply chains. All this gradually comes into the picture as China pushed its zero COVID strategy ahead due to the spike in infections that has given way to curbs and lockdowns across the largest port hubs as well as prominent cities in the country.
According to Supply Wisdom’s founder and chairman, Atul Vashistha, the ports are yet to close. However, steps like mandatory quarantines and rapid testing have consistently slowed down the overall transport and caused delays. The country’s highest priority as of now happens to be limiting the pandemic before the next month’s Winter Olympics and also the upcoming lunar new year. Because of this, curbs have been put in place, resulting in chaos of a kind.
Vashistha adds that as the ships have been banned from entry, products are piling up. 2022, according to him, is starting off the way 2021 ended, all between negative PCR requirements and the last minute re-routing of ships.
Notably, cases have come from Shenzhen, Ningbo, and Tianjin, all of which are considered key port cities, as well as Xi’an, which is considered an industrial hub of China. Beijing reported its first locally transmitted omicron case on January 15, thereby introducing new restrictions. Recently, just a couple of weeks before the scheduled Winter Olympics, new restrictions have been imposed because of an outbreak of nine locally transmitted people.
Besides, the Ningbo outbreak at the end of 2021 also sparked some elevation in curbs, disrupting traffic at Ningbo-Zhoushan, which happens to be the world’s third busiest port. Judah Levine from Freightos Group, which is a freight booking platform, opined that although operations have largely resumed since the Ningbo outbreak in December, shipments due to that were diverted to Shanghai, the busiest port in the world, which in turn caused congestion and delays there as well.
Project44, which is a supply chain tech firm, confirmed that the shift from Ningbo to Shanghai backfired for some firms since the congestion in the latter increased with time. All this saw Shanghai record an 86% rise in Y-o-Y blank sailings, which means the carrier decided not to go ahead with a particular port or, for that matter, the entire voyage.
Freightos’ Levine went on to say that all the focus was on China and the impact that containment measures might have had on its logistics. As per him, steps were taken to curtail the virus in many places like Shenzhen, Beijing, Dalian, and Tianjin, as well as other cities too.
