ANOTHER NINGBO LOCKDOWN ADDS TO COVID THREAT HANGING OVER SUPPLY CHAINS

A new partial lockdown in Ningbo has highlighted the threat to container supply chains from China’s strict zero-Covid policy.

Positive cases in Ningbo’s Zhenhai district prompted “closed loop” management to be imposed on Monday, according to local media.

The city is home to the world’s third-largest container port complex, Ningbo-Zhoushan, which handled 28.7m teu during the first ten months of the year, surpassing 2020’s total throughput.

There has been no impact on supply chains so far, but with similar isolated lockdowns within the Yangtze River Delta, including in Shanghai, some forwarders in the region are bracing for disruption.

Chinese forwarder Triman Shipping said: “A new pandemic outbreak would probably lead to container terminal and shipping delays and bring more congestion.

“The worst result would be a Ningbo city-wide lockdown, causing paralysis of the logistics industry and the terminals.

“However, we believe due to the ability of China to quickly respond to the epidemic and control the local region, it will recover soon.”

Another forwarder, based in Shanghai, told The Loadstar the few partial lockdowns in China recently had little impact on the economy at large.

“It happened in Shanghai two weeks ago after finding a few new Covid cases,” he said. “But it doesn’t affect the daily lifestyle or businesses of 99% of the people. The lockdowns only apply to a very limited area where there are confirmed cases.”

Nevertheless, according to Lars Jensen, CEO of Vespucci Maritime, the Ningbo incident “clearly illustrates that there remains a high risk of further supply chain disruption from Covid outbreaks in China”.

Any partial lockdowns of container terminals could bring a repeat of the shipping disruption experienced earlier this year, that included the closure of one of Ningbo’s terminals in August and the more serious incident when Yantian suspended export operations in May.

However, in addition to snap 14-day lockdowns, China’s zero-Covid policy continues to play havoc with vessel crew changes, which has created a shortage of feeder capacity in the busy period leading up to Chinese New Year on 1 February.

The arrival of the Omicron variant has added to supply chain uncertainty, with continued spending on goods over services helping to keep freight rates from China elevated. According to Platts, the all-inclusive, freight all kinds (FAK) transpacific spot rate is $16,000-$18,000 per 40ft.

And in airfreight, China’s quarantine rules for pilots are hampering airline schedules – notably Cathay Pacific, which recently had to isolate more than 100 crew after three pilots tested positive.

Source: https://theloadstar.com

Writer: Sam Whelan