Under the implementation of the zero-clearing policy, Shanghai has been blocked for nearly a month. Since the factory cannot deliver goods, the cargo carrier has cut prices to strive for export goods, so that the immediate ocean freight rate has dropped. This is a signal before the supply chain chaos two years ago. The market is worried that if Shanghai once Unblocking, these delayed orders will again cause congestion in all aspects of logistics, and ocean freight rates may soar again.
Shanghai, a city of 25 million people and one of China’s largest manufacturing and export hubs, is currently under an indefinite city-wide lockdown, and while China has not closed ports as it did during the 2021 Covid-19 pandemic, due to inland quarantine measures This has led to the closure of some factories and a severe shortage of truck drivers to transport goods from factories to warehouses to ports.
Truck drivers are an important part of China’s supply chain, transporting raw materials from coastal ports to factories farther inland. Foreign media reports pointed out that some drivers in China are now reluctant to go to Shanghai because they are worried that they will be quarantined. Similarly, other cities are also reluctant to allow Shanghai truck drivers to come in, which has caused the factory to export goods that cannot be shipped smoothly.
Mediterranean Shipping Company (MSC) has informed customers that the port is experiencing significant congestion due to the impact of the epidemic prevention measures in Shanghai, including the lack of available trucking restricting unloading capacity, and the insufficient supply of reefer container plugs, sometimes not at all, if Without an available power source, MSC will not be able to unload reefer containers at designated ports.
From the start of Shanghai’s lockdown on March 12 to April 8, container shipping rates fell 5% to $9,280 per container. Some routes saw even steeper declines, such as between Europe and China, which saw a 9% drop. Another data released on April 8 showed that from March 12 to April 4, the volume of goods shipped by sea from Shanghai fell by 26%, while the volume of truck cargo carrying goods leaving the port at the same time fell by 19%. With so little cargo, shipping lines are preparing to announce empty ships from Asia in the next few weeks.
The number of ships waiting to berth at the ports of Los Angeles and Long Beach has also dropped sharply over the past few weeks, with an average berthing delay of less than two days, a sharp departure from the heavy traffic jams at the end of last year and the beginning of the year, but the chief executive of supply chain freight platform Shifl warned that when When China lifts the blockade, there could be a new wave of congestion at U.S. West Coast ports.
The timing of a return to normal business in China by then may be inopportune, and if it coincides with docker contract negotiations, port operations at the ports of Los Angeles and Long Beach have traditionally been shut down and ship queues are extended, potentially putting more pressure on freight rates. A Bloomberg interview with Citi analysts noted that Shanghai’s truck driver shortage and warehouse closures also affected nearby Zhejiang and Jiangsu, major manufacturing hubs that account for about a third of China’s total exports Seriously affect regional supply chains, especially Taiwan, Vietnam, and South Korea.
The logistics industry has foreseen that when factories reopen in the future, there will be a lot of cargo to be shipped, Chinese ports will not have enough containers, and prices will rise, once again disrupting the global supply chain that has only just recovered slightly.