Congestion in Chinese ports worsens, with negative repercussions worldwide

Port congestion in neighboring Shanghai and Hong Kong is increasing once again due to the closure of the Meishan terminal at Ningbo Port, a major port and industrial hub in the eastern province of Zhejiang, south of Shanghai. Last week, a port worker was infected with the virus and forced the Meishan terminal to close. A single person has put the economy of a large part of the world in difficulty.

Source: Bloomberg
At least a quarter of the port's capacity has been canceled, forcing some of the world's largest shipping companies to divert ships to other surrounding ports, or to keep them at sea for a long time.

Simon Heaney, senior manager of container research at Drewry Shipping Consultants Ltd., said Moller-Maersk A / S and CMA CGM SA, the world's largest shipping company, are skipping Ningbo Port after the closure it is extended to the seventh day.

The average number of container ships anchored off Xiamen, a port city on the southeast coast of China, across a strait from Taiwan, was 24 on Tuesday, up from 6 at the beginning of the month. The ships anchored in the ports of Shanghai and Ningbo were more than 141, 60 more than the average from April to August.

Source: Bloomberg
Ningbo is the third largest container port in the world after Shanghai and Singapore, but the busiest container port in the world by volume.

Source: Bloomberg
The consequences of capacity limitation in Ningbo are already evident and are spreading to surrounding ports, causing massive congestion. We see the dots, which indicate ships concentrating off the most problematic ports.

The weekly closure of the terminal causes freight to be diverted to other ports, putting a strain on their operations and exacerbating capacity problems that have led to shipping rates ten times higher than normal for specific routes.

Michael Every, Head of Asia-Pacific Financial Markets Research at Rabobank, recently said that Delta leads to further disruptions to shipments in China's busiest ports. The virus is also affecting Vietnamese and Thai manufacturing. There is a risk of seeing a deterioration in deliveries from outside China as well. Anecdotes speak of freight forwarders telling customers that they won't deliver except with a prize; of smaller companies and countries that are rejected on the priority list; of ships refusing to collect exported goods from certain locations; and a structural misalignment between supply and demand for containers and structures. A colossal problem which, in the short term, will place strong constraints on the supply of goods in the West.

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The article Worsens congestion in Chinese ports, with worldwide negative repercussions comes from ScenariEconomici.it .

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This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/peggiora-la-congestione-nei-porti-cinesi-con-ricadute-negative-mondiali/ on Thu, 19 Aug 2021 06:00:32 +0000.