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AMZN: APPEAL UPDATEDSV: PRESSURE BUILDS AAPL: OPENAI FUNDING INTERESTCHRW: ANOTHER INSIDER CASHES INHLAG: GRI DISCLOSUREMAERSK: HOVERING AROUND FOUR-MONTH LOWSTSLA: CHINA COMPETITIONDHL: BOLT-ON DEAL TALKAMZN: NEW ZEALAND PROJECTDHL: SURCHARGE RISKKNIN: LEGAL RISKF: 'DEI' HURDLESPLD: RATING UPDATEXOM: DISPOSALS
The Year of the Ox may have begun today, but more trouble lies ahead for container supply chains post-Chinese New Year.
In fact, a carbon-copy of the port congestion and landside disruption seen in China twelve months ago could be on the cards.
Most Chinese were at home celebrating the holiday when the Covid-19 virus first surfaced in Wuhan in January 2020, triggering the first lockdowns across the country.
As a result, when factories came back online after an extended CNY period, thousands of truck drivers were stranded outside major metro areas and container gateways on China’s east and south coasts – their return hampered by quarantine restrictions and transport disruption.
Reefer cargo was particularly affected, given the dearth of truck capacity available to pick up and drop off containers and a lack of available reefer plugs meant costly losses from rotting perishables.
According to data provider Ocean Insights, a similar breakdown in intermodal connectivity in China could be about to unfold after another round of Covid restrictions and the decision by many manufacturers to keep assembly lines running through the holiday.
“Chinese governments are calling for citizens to stay put and ‘celebrate in place’, keeping factories open to offset the seasonal decline in output during the CNY,” Ocean Insights noted.
“However, getting those products to market will be a challenge. Most truckers have opted to go home for New Year, making them subject to mandatory quarantines and unable to drive. In some regions, up to 95% of truckers will be unavailable, with the worst-hit regions in the south.”
The situation will “choke factory-port connectivity”, starting in two weeks, Ocean Insights claims, adding it will be “a new bottleneck for global shipping and supply chains.”
Already, in South China, the well-documented bull-run in container shipping has seen ports such as Yantian overflowing with cargo, with eye-watering truck queues clogging the port’s access roads.
And the suspension of Pearl River Delta feeder services prior to CNY has compounded the situation, with forwarders warning of increased costs from the inevitable switch of cargo from river barges to road freight.
The port congestion in China has also led to an uptick in rolled cargo by shipping lines. Ocean Insight’s overall rollover percentage crept up two points to 39% in January, a 9% increase year on year.
Chief operations officer Josh Brazil said: “The shipping lines have said that the backlog of cargo will be cleared after CNY, and that will likely occur as the levels of deliveries from factories drop off. But supply chains may take several more months to return to some semblance of normality as inventory, now trapped further up the supply chain, will need to be cleared.”
Carrier schedule reliability has also continued a steady deterioration since last year, with Ocean Insights noting the average delay for containers having increased “from about one day in January 2020, to more than five days in January 2021.”
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