China’s Covid-Driven Shutdowns Require Careful Monitoring by US Ports and Supply Chains

Recent developments in China related to the rise in Omicron variant infections appear to have a significant downstream impact on import patterns to the United States, at a time when supply chain congestion issues seem to show signs of improvement.

This was made clear in a recent report by The New York Times, which observed that Chinese authorities are “imposing lockdowns and restrictions that add chaos to global supply chains,” coupled with China’s zero-Covid policy, with many of China’s biggest industrial cities battling epidemics. , which impact its factory and transportation networks, considered the backbone of China’s manufacturing industry, as well as the global economy.

Additionally, the report notes that since Omicron infections resumed in China, a number of cities with manufacturing operations and major presences have closed, including: Dongguan and Shenzhen in southern China near Hong Kong , where Foxconn has huge factories to make iPhones and other Apple products; Changchun and Jilin City in Jilin Province; and Langfang, near Beijing. And he added that some small towns have also been blocked, such as Suifenhe and Manzhouli on the China-Russia border.

Data from Chicago-based Fourkites, a provider of real-time tracking and visibility solutions across transportation modes and digital platforms, highlighted some of the impacts of China’s lockdown on ocean freight volume at Shenzhen, China.

The company’s data showed that in Guangdong province, where the city of Shenzhen is located, the seven-day average ocean load volume for imports and exports has fallen by 43% since March 1, adding that on March 17, the seven-day average load volume decreased by 39% week-over-week.

As for dwell times, FourKites said dwell times at the port of Shenzhen remain stable, hovering around 8.3 days for exports and 5.1 days for imports, although dwell times will likely increase over the next few days as the flow decreases.

“Shenzhen is the second busiest port after Shanghai, so we expect a significant shift in volume to other ports in China,” said Ryan Closser, director of network collaboration at FourKites. “This will increase potential downtime, sub-optimal routing, as well as increased inland costs to move freight to a port further from the point of manufacture. Regarding navigation in the current situation, I would advise [shippers] to transport urgent goods to alternative ports, and monitor the reopening of the port to direct any relief. The thing is, shipments to the United States are likely to stay on ships for a while anyway, so a few more weeks of closure may not have huge disruptions, but the longer the area is closed, the more it will have a ripple effect. ”

The San Francisco-based freight forwarding and customs brokerage service provider also offered guidance to shippers regarding this current situation in a market update.

With the Covid outbreaks in China and subsequent lockdown and restriction measures disrupting production and business activity in the southern (Shenzhen/Dongguan) and eastern (Shanghai) regions, Flexport said that shipping lines are assessing the impacts on bookings and have yet to announce blank crossings.

“Additional market volatility factors remain: severe congestion, equipment imbalances, slippery ship schedules, port omissions, blank starts and rising fuel costs,” he said. declared. “The removals market remains mostly at premium levels with pockets and routes open for FAK (freight of all kinds).”

Unsurprisingly, Flexport noted that pricing levels remain high, with a strong high-end market and space at critical levels and severe undercapacity as well. He advised shippers that it is essential to: book at least three to four weeks before the cargo availability date; consider premium options; be flexible in terms of equipment and routes; and to check closely with suppliers to understand any Covid-related impacts or changes to releases and production forecasts.

From a port perspective, the Port of Los Angeles executive director said on a media conference call last week that China’s zero Covid policy could lead to slowdowns in ports and supply chains as well as in factories, which he says are just as important.

“We’ll be watching this closely and seeing what traffic patterns, energy use and pollution look like to see how quickly factories can restart if forced to close for short periods of time,” he said. he declares.

About the Author

Jeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics management, Modern material handlingand Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine where he covers all aspects of the supply chain, logistics, freight forwarding and material handling industries on a daily basis. Contact Jeff Berman

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