Watch Now

Viewpoint: Keep an eye on Shanghai

Don’t be misled by purportedly targeted ‘zero-COVID’ measures

The expansion of zero-COVID restrictions in Shanghai needs to be monitored closely, says Lori Ann LaRocco. (Photo: Shutterstock)

The latest disruption indicators show no matter how targeted a “zero-COVID” measure is in China, there are impacts to the flow of trade. The latest disruption indicator from Kuehne + Nagel dismisses the downplaying bluster and the claims that the Yantian port was “operating normally.”

Port productivity hinges more on vessels. Otto Schacht, EVP of sea logistics at Kuehne + Nagel, tells American Shipper the disruption he posted on his LinkedIn post “is the effect of the partial lockdown in southern China due to COVID, factories closed for a week, terminals, less cargo, etc.”

Windward posted similar disruption data, showing a decrease of 84% in the volume of container processing at the Port of Yantian.

Containers don’t lie.

According to HLS Holding’s latest email to clients, “The result of the disruption in Shenzhen and Shanghai is impacting container turnaround. … CMA equipment shortage is now deteriorating at many origin ports, so CMA likes to push more SOC business from Shanghai and Ningbo to PSW. … Once the lockdown in China is lifted, the huge backlog of delayed containers will fill the vessels and make space tight again.”  

The company also cautioned that as a result of the restricted trucking services and labor shortages, shippers should be bracing for “skyrocketing haulage costs.”

But it was its update on Shanghai that was the most alarming.

“Shanghai: The quarantine area has been further expanded with dynamical changes. The city is organizing massive nucleic acid testing, and COVID test reports valid for 48 hours are widely required for almost all public activities.”

According to MarineTraffic, there is an uptick in anchorage time off the port. This is based on the decrease in the workforce.

MarineTraffic tells American Shipper the number of container ships waiting off port limits (OPL) outside Shanghai has increased. As of Thursday, 57 container ships are waiting outside port limits, whereas two weeks ago there were just 27 box ships.

“In just a month, over 100,000 additional containers capacity is strung waiting outside Shanghai,” says Alex Charvalias, supply chain in-transit visibility lead at MarineTraffic. “We also see a number of bulk carriers waiting outside the port too.”

While the drop of container volume post-Chinese New Year may be over, you can see the hiccups these restrictions are presently having.

If the disruption indicators show how a targeted one-week shutdown in Shenzhen impacted the Port of Yantian, the expansion of restrictions in Shanghai needs to be monitored closely. The region is in its second week of targeted restrictions and Shanghai is the world’s busiest container port. Don’t let the rhetoric of “normal ocean terminal operations’” blindside you. The “zero-COVID” bubble at the port may be intact because you have workers living there. Outside of that bubble, you have an iron fist choking trade.

Lori Ann LaRocco

Lori Ann LaRocco is senior editor of guests for CNBC business news. She coordinates high profile interviews and special multi-million dollar on-location productions for all shows on the network. Her specialty is in politics, working with titans of industry. LaRocco is the author of: “Trade War: Containers Don’t Lie, Navigating the Bluster” (Marine Money Inc., 2019) “Dynasties of the Sea: The Untold Stories of the Postwar Shipping Pioneers” (Marine Money Inc., 2018), “Opportunity Knocking” (Agate Publishing, 2014), “Dynasties of the Sea: The Ships and Entrepreneurs Who Ushered in the Era of Free Trade” (Marine Money, 2012), and “Thriving in the New Economy: Lessons from Today’s Top Business Minds” (Wiley, 2010).