Chinese Port Closure Increases Global Shipping Bottleneck
One of China's busiest ports blamed a Covid outbreak for stopping export operations in late May.
YANTIAN PORT, CHINA — The global shipping industry is already exhausted by pandemic shocks that are adding to inflation pressures and delivery delays. However, the worst is still to come.
When one of China's busiest ports announced it wouldn't accept new export containers in late May because of a Covid-19 outbreak, it was supposed to be up and running again in a few days. But as the partial shutdown drags on, it is worsening trade-route bottlenecks and lifting record freight prices even higher. Here are the details:
Bloomberg reports that the shipping backlog created when a ship got stuck sideways in the Suez canal for a week in March, is nothing compared to the backlog the global shipping industry is currently facing.
The bottleneck is currently so severe that it costs companies more than 11,000 dollars to ship a 12-meter container from Rotterdam to Shanghai. That's almost seven times more than it would have cost a year ago.
On top of that, it's looking like retailers won't be able to restock their warehouses for the crucial Christmas season in the U.S. and Europe, which means there might not be much to buy for Christmas, and things might cost a lot more.
The biggest problem is that many ports had to cut back on container-handling functions due to COVID outbreaks.
The worst case is currently in Yantian Port, which is one of China's busiest ports.
Yantian Port now says it will be back to normal by the end of June. But even if that pans out, it may take months for the cargo backlog in southern China to clear, while the fallout ripples to ports worldwide.
U.S. Federal Reserve policy makers raised their inflation forecasts on Wednesday 16 June, partly because shipping bottlenecks have formed and supply fails to keep pace with demand.
So, it seems that this Christmas would be a good time to enjoy being with our loved ones, rather than obsessing about material things.
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