Maritime News

[#SNP_SPOTLIGHT] Supply chain pressure mounts as Shanghai extends lockdown


[#SNP_SPOTLIGHT] Supply chain pressure mounts as Shanghai extends lockdown

Since China Government’s announcement on 28th March, the lock-down requirements impose restrictions on all kinds of transportation, including public roads, which will limit pick-up and delivery opportunities to airports and seaports. Ultimately this will lead to some service disruptions and delays, with a number of airlines having canceled flights to and from Pudong airport.

For shipping, congestion at the port – already very high – is expected to increase in the coming days, while overseas terminals in Europe and North America will have to brace for an even larger whiplash effect when the city regains normal productivity – and comes as global supply chains absorb the fallout from a seven-day lockdown in Shenzhen to the south earlier this month. Public transport will be suspended, as will production at most factories. However, essential workers, including port labour, will be exempt from the stay-at-home order.
Commenting on the ramifications for container shipping, Lars Jensen, CEO of consultancy Vespucci Maritime, stated via LinkedIn: “If this is widespread, it will mean demand slow-down in the short term and downward spot rate pressure, followed by a surge and upwards pressure.”
“Obviously, this disrupts the flow of containerized cargo, when truck drivers must pass many Covid tests to do their jobs. And closure of factories this week is not improving a situation that has soured for most of March,” commented Peter Sand, chief analyst at Xeneta, going on to predict a likely further softening in spot rates in the coming weeks.

Counter-measure solutions
In an attempt to alleviate the pressure of lockdown on road transportation, the Shanghai International Port Group (SIPG) has announced the launch of a container “land-to-water” service, covering the ports in the Yangshan area and Waigaoqiao area of Shanghai port to related ports in the Yangtze River Delta areas.
Under the service, customers can first transport containers to the Taicang Service Center, and then transfer them by ship to Shanghai Port, and divert customers’ road transportation needs to waterways.

Bottlenecks lead Maersk to adjust shipping schedules. Ocean Network Express (ONE) has announced the possibility of delays across the supply chain due to the extension of the lockdown in Shanghai.
Despite operations remaining active at the Port of Shanghai, the company (ONE) has notified customers that trucking availability is very limited at the moment, and the clearance of import cargoes has been impacted.
Due to reported constraints in the yard side, the Yangshan and Wai Gao Qiao PH2 terminals have been impacted the most, and Dangerous Goods and Reefer may not be allowed to discharge if the quantity cannot be accommodated. The company has announced it will arrange alternative discharging operations if congestion escalates further, and will keep monitoring the situation.