Source: Splash247
Date: 26th April 2022
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 cities 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.
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. 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 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. 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 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.
The effects of a lockdown cascades through the supply chains, and therefore congestion may linger for a while. 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.