(Updated July 12, 1:00 P.M. ET with information on CMA CGM, MSC delays)
Chinese authorities on Wednesday closed a major container terminal at the Port of Ningbo after a dock worker tested positive for COVID, raising fears among traders that supply chain disruptions that occurred when Yantian terminal in Shenzhen reduced output by 70% for a month earlier this summer would be repeated.
All operations at the Ningbo Meidong Container Terminal, also referred to as the Meishan Terminal, were immediately suspended following the positive test results, according to local media reports and logistics operators.
“With this sudden suspension, we expect a delay in planned sailings that might affect your cargo planning. Please know that we are working on alternatives, and hope for your understanding on a matter that is beyond our control,” German vessel operator Hapag-Lloyd said in a customer notice posted on its website.
There are five container terminals in Ningbo. The port’s decision to shut down vessel and gate operations for at least a day effectively eliminated 20% of the port’s capacity.
Ningbo is the third-largest container port in the world after Shanghai and Singapore. It handled more freight in the first seven months of this year — 18.7 million twenty-foot equivalent units — than any other port in China, the Ministry of Transportation said last week.
On Thursday, Mediterranean Shipping Co. pushed back estimated arrival times for two vessels departing Ningbo to the U.S. The MSC Danit, on the Sequoi service, is now scheduled to arrive on the U.S. west coast on Sept. 15, and the Maersk Seville, on the Lone Star service and part of the 2M Alliance, will arrive at its first east coast port on Oct. 2, according to an updated schedule issued Thursday.
Carrier CMA CGM issued an advisory saying that some vessels will be re-routed to Shanghai or skip port calls at Ningbo.
If the outbreak spreads and authorities take further steps to lock down, the impact potentially could be greater than what happened when Yantian partially locked down in late May and June. The limited activity in Yantian forced vessels to wait more than a week to reach a berth and created ripple effects worldwide. Many vessels skipped Yantian for other ports in south China, creating massive congestion in those locations. Backlogged shipments took weeks to clear from the docks and are still being pulled from warehouses and factories, upsetting delivery schedules for retailers and manufacturers.
“If something goes sideways in Ningbo, it’s going to be a real problem. At least as big, potentially, as what happened in Yantian,” a sea freight executive at a large logistics company said during a customer briefing American Shipper was privy to.
The freight forwarding division of C.H. Robinson told customers in an email notice to expect port delays and congestion.
Any lengthy closure could result in cargo diversion to other terminals and ports, putting a strain on their operations and exacerbating capacity challenges that have led to record shipping rates 10 times greater than normal for certain routes.
China has a much more restrictive approach toward handling COVID flare-ups than many other nations, which is adding to shipping uncertainty as the peak season goes into full swing. Other countries in Southeast Asia, notably Vietnam, Malaysia and Thailand, have also taken aggressive measures to contain outbreaks, including strict rules regarding workers that have forced many factories to close or scale back production.