3898
Views

Strict COVID-19 Lockdown Impacts Port Operations at Shanghai

Shanghai Yangshan
File image

Published Apr 11, 2022 9:14 PM by The Maritime Executive

Despite early official denials, the COVID-19 lockdown in Shanghai is having a significant effect on shipping operations around Hangzhou Bay, home to the largest concentration of container terminals in the world. 

An outbreak of the highly-infectious Omicron variant began in Shanghai in early March. After basic preventive measures failed to halt its spread, officials in Shanghai began to implement area-based controls on March 28. The measures have grown more stringent, including daily COVID-19 testing and a full residential lockdown for the city's 25 million people. Residents report that they are reliant on deliveries for basic goods and are not permitted to leave their homes, and food shortages have prompted isolated public protests.

This intensive response has taken a severe toll on the logistics system that serves the port of Shanghai. Freight forwarders report that the vast majority of drayage capacity is unavailable, with drivers locked down and area control checkpoints interfering with the few trucks still moving. One logistics company has advised its customers that commercial trucks may be seized by government officials and repurposed for transporting aid supplies. 

The drayage interruption interferes with pickups at the port, and terminals are filling up with unclaimed import boxes - including boxes of much needed frozen food for Shanghai's populace. According to number-one ocean carrier MSC, terminals at Shanghai may be running out of available reefer container plugs and may be unable to receive more refrigerated boxes. The line plans to discharge Shanghai-bound reefer boxes at other ports, adding cost and time to the shipments. Japanese ocean carrier ONE and French carrier CMA CGM have seported similar challenges. 

"These factors have a major impact on import cargo that suffer drastically slower pick up time and therefore excessively stretched dwell time," CMA CGM said in an advisory Friday. 

Anecdotal reports suggest that exports are also heavily affected. The EU Chamber of Commerce in China told CNBC that Shanghai's container port volumes have fallen by an estimated 40 percent since the start of the lockdown. According to container market consultancy Sea-Intelligence, if the disruption at Shanghai continues at the current rate, ocean carriers may begin to blank sailings from the port during peak season. This would limit slot availability, exacerbating congestion on core East-West tradelanes - and could drive already-high freight rates to "new records," the consultancy said. 

Tankers and bulkers have not been exempt from the snarl, according to AIS data. Fuel demand in Shanghai has plummeted due to the lockdown, and refining runs have declined in parallel; this has increased the average wait time at anchor for tankers. Bulker queues off Shanghai, Ningbo-Zhoushan, Rizhao, Dongjiakou and Qingdao have also increased markedly, according to Bloomberg.