Shippers in China are canceling cargo bookings while forwarders are diverting freight to other ports amid worsening COVID-19 outbreaks across the country that have led to widespread lockdowns in key port cities, including Shenzhen and Shanghai. China reported more than 5,000 new COVID-19 cases over the weekend, the highest number in two years.
While carriers and port operators said terminals are working normally, the lockdowns mean factories, warehouses, and distribution centers are closed and there is limited trucking capacity.
“From what we see, cargo could disappear due to factory closures before the terminals close,” said a Hong Kong-based freight forwarding executive.
A seven-day lockdown began Monday in Shenzhen after 66 people tested positive for the virus. That led to the immediate shuttering of most factories and warehouses with people confined to their homes except to buy food or to be tested for the virus.
“We have already had several shippers canceling bookings in Shenzhen due to the lockdown this week,” a senior executive at an Asia-based logistics company told JOC.com Monday. “They have canceled because factories are either closed or people are unable to leave home.”
“We might expect a similar situation in Shanghai if the situation there worsens,” the source added.
Paul Tsui Hon-yan, managing director of Hong Kong-based freight forwarder the Janel Group, said full container loads can still be picked up from second-and third-tier cities close to Shenzhen, such as Dongguan, and trucked to the Shenzhen terminals. “However, we do not know whether further lockdowns will be implemented later to affect shipments,” he told JOC.com.
Clark Liu, Rhenus Logistics general manager for Southern China, said warehouses and distribution centers in the Shenzhen area are closed. He added there is very limited trucking after Shenzhen authorities imposed a ban on trucks entering the city except for essential business as part of the lockdown measures announced late Sunday local time.
Truckers entering Shenzhen to drop off or pick up cargo must present a negative COVID-19 test. The Asia logistics executive said drivers are already reluctant to enter lockdown areas. “The cost of trucking might increase due to drivers wanting more money,” he added.
‘Normal and smooth operations’ at YICT
A spokesperson for Yantian International Container Terminal (YICT) confirmed the facility remained open.
“Since the strengthening of epidemic prevention policy in Shenzhen (Sunday), Yantian has been maintaining normal and smooth operations,” she told JOC.com. “At present, all operations in Yantian are operating normally.”
YICT handled 14.2 million TEU last year, about 50 percent of Shenzhen’s total throughput of 28.8 million TEU. YICT also handles about 25 percent of China’s containerized exports to the US.
The spokesperson said the daily Yantian-Hong Kong express feeder service — which started on Feb. 19 after Shenzhen authorities imposed a 14- and 21-day quarantine on cross-boundary truckers led to food shortages in Hong Kong — remained stable.
Carriers said other ports in southern China’s Guangdong province, including Nansha, Shantou, and Qinzhou, are unaffected and operating normally.
In western Shenzhen, the Shekou and Chiwan container terminals, controlled by China Merchants Port Holdings, are also operating normally.
Hong Kong’s Modern Terminals, which controls the DaChan Bay terminals, said: “operations remain normal as there have been special arrangements for frontline staff.” “The terminals will continue to ensure quick handling of shipments of daily supplies to Hong Kong via the seaway express services,” a Modern Terminals spokesperson told JOC.com.
Shanghai quarantine area could be expanded
In Shanghai, about 30 to 40 percent of the city is affected by local lockdowns, Janel Group’s Tsui told JOC.com
“It looks like the quarantine area will be further expanded in the next couple of days, which will certainly affect cargo operations,” he said. “Right now, we are trying to move shipments via Ningbo instead of Shanghai to better accommodate the situation.”
Port, warehousing, and trucking operations remain normal in Ningbo, although nearby cities, including the high-tech hub of Hangzhou, Wenzhou, and Jiaxing have local lockdowns that have led to factory closures. In the northern Chinese port city of Qingdao, port and warehousing operations are also normal, but there is restricted trucking capacity at other cities in Shandong province.
A spokesperson for Mediterranean Shipping Co. said its “daily business operations remain unaffected.”
Still, rate benchmarking platform Xeneta said in a note Monday it’s only a matter of time before the landside disruptions extend to the water. “Trucks from outside Shenzhen are unable to enter the city, and cross-border shipments from Shenzhen to Hong Kong will not move, unless they carry essential goods to Hong Kong,” it said. “Liner operators will apply contingency plans. Ocean imports and exports will be disrupted.”
Container xChange warned of worsening cargo disruption from lockdowns across China. “Overall, the lockdowns in China are expected to bring further turmoil into the already broken supply chain,” the company said in a report Monday.
Shenzhen health officials said the city’s entire population of 17 million would be tested three times during the next seven days. Health officials said the lockdown would run until Mar. 20, although it could be extended if the outbreak worsened.
Container terminals in Hong Kong are also operating even as the government considers a tightening of quarantine after the number of cases and deaths surged to new records last week.