The Chinese ports operating at a bare minimum capacity due to the covid restrictions imposed by the government are having a cascading effect on the already stretched global supply chain crisis. Experts believe that the disruption faced last year will pale into insignificance compared to what is coming.
In the container trade, any impact on China will see others get affected as the top ten global container ports (including Hong Kong) are in China.
Among the many challenges at the Chinese ports, crushing throughput due to covid restrictions has emerged as a major issue, which is keeping the ships waiting at docks.
Shipping line Maersk has stopped all new reefer and dangerous cargo bookings effective April 14 in Shanghai, the world’s largest container port, until further notice. “We regret to inform you that several vessels will be omitting Shanghai,” said an advisory is given by the world’s largest shipping line.
Similar advisories were issued by other shipping lines as well. Ningbo-Zhoushan Port, the third-largest globally, is also impacted. Maersk’s Ningbo office remained closed from April 13 until further notice.
As ships are waiting to load/unload cargo in Chinese ports, lakhs of empty containers meant for China are also stuck at US ports and warehouses. This is causing a huge imbalance in the supply and demand for boxes.
Impact in India
The disruptions caused to the container trade have left India worried about a possible diversion of large volumes of empty containers to China to load cargo for the US markets at a premium, said an official of a leading shipping line.
Experts believe that accessory importers may face delays in getting their shipment. They expect the shortage of containers to aggregate and warn of a possible rise in shipping rates, which have been reduced a bit recently.
“When Shanghai re-opens, we may see an avalanche of pent-up demand from the backlog of orders that were scheduled to leave Shanghai in March and April, “warns Jon Monroe, a global expert in shipping. A perfect condition for the diversion of empties.
With no end to the Russian-Ukraine war, China’s zero Covid policy and consequent lockdowns, Disruption is bound to happen given the fact that the war is extending, China is facing pandemic lockdown, low throughput not just in China but also in US and European ports and a global shortage of containers will impact Exim trade of Indian business, especially exports, said G Raghu Sankar, Executive Director, International Clearing and Shipping Agency (India) Pvt Ltd.
At a time when Indian exports are booming and the country is ambitiously looking to grow its merchandise exports to $1 trillion by 2027, supply chain disruptions can turn out to be a real spoiler.