Published by The Maritime Executive

Published by The Maritime Executive

Published by The Maritime Executive

Published by The Maritime Executive

Published May 13, 2022 1:13 PM by The Maritime Executive

Chinese health officials are expecting to complete a phased reopening of Shanghai nearly eight weeks after the city went into what had been announced as a short lockdown to control a surge in cases of the COVID-19 virus. Shippers while reporting some progress at the world’s largest container port however remain cautious based on past promises that China was reducing restrictions along with uncertainty on how long it will take to resume normal operations.

During a press briefing on May 13, Shanghai’s vice-mayor Wu Qing reported that some sections of the city had already seen a relaxation of restrictions with residents being permitted to leave their homes for walks in the parks and limited numbers to go food shopping. He cited progress in controlling the spread of the virus saying it was limited to a few zones that remained under stricter controls. The BBC, however, reported that controls were being increased in those zones this week.

Shanghai recorded over 2,000 new positive tests on Friday, but just over 200 were reported to be symptomatic. The officials said the plan is for a gradual reopening in phases which they expect to complete by May 20.

Shanghai in recent weeks had permitted some manufacturing facilities to reopen while emphasizing that port operations were continuing. In most cases, they were requiring what they call a closed-loop where workers live onsite and are restricted from interaction with other parts of the city. The restrictions on trucking however were severely hampering the movement of goods and containers not only at Shanghai but in other major ports and terminals. Maersk warned customers earlier this week that some depots in Shanghai have remained closed since March 28 and are not expected to reopen until further notice.

CMA CGM reports that it is still experiencing delays at the terminals in Shanghai due to shortages of labor. They however highlighted that with long waits cargo is moving including reefer shipments and special cargos that had been restricted.

Starting in early April, major shipping companies reported that the reefer yards were becoming full and were turning away reefer cargos or urging shippers to use alternate ports. Maersk advised customers this week that reefer cargo yard density is gradually being relieved in the port of Shanghai. “In light of the development, we are pleased to advise that we will re-start the booking acceptance for reefer bookings into Shanghai, with the first cargo accepted to arrive in Shanghai from June 26 and onwards,” Maersk wrote in its most recent customer advisory.

The impact on the port, however, has been severe with many shippers left questioning the speed of recovery. While emphasizing that the port was moving containers, Shanghai officials also reported volumes were down by a quarter in April to just over three million TEU.

Delays will "continue into the summer months," as factories struggle to return to normal operations in Shanghai, Josh Brazil, director of Supply Chain Data Insights at Project44 forecasted to CNN at the beginning of this week. The platform which tracks container availability to match shippers reported that delays between China and major ports quadrupled during the lockdown.

One-in-five of the world’s container ships were reported to be waiting offshore at ports according to a report from Windward, an AI data analytics firm. They estimated that 412 ships were stuck outside Chinese ports as of late April up by more than half since February. Specifically, at Shanghai, S&P Global Market Intelligence estimated 384 vessels were waiting at the port by April 25 up by a quarter in just one month’s time.

“The lockdown in Shanghai will exacerbate global supply-chain pressures and inflation concerns,” said Fitch Ratings in its latest economic report. “Much of this disruption, however, is yet to be reflected in hard global macro data, although China’s overall exports slowed sharply in April. As supply-chain disruptions persist, container freight rates could remain elevated or increase,” S&P’s economists forecast.

At the peak of the lockdown in Shanghai, data Project44 shared with CNN showed that containers were sitting for as many as 15 days at the port. While the delay had tripled versus before the lockdown, Project 44 says as the restrictions began to ease the average wait time was reduced to 10 days. 

Shippers are waiting to see if the Chinese will follow through on their statements to further ease the restrictions and are hopeful that port operations will rebound in the coming weeks.  

Published May 13, 2022 7:47 PM by The Maritime Executive

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