China’s pursuit of its zero-COVID strategy has delivered a new blow to global supply chains. Several of China’s largest factory cities have ordered lockdowns amid a surge of COVID cases, three-fifths of which are in people with no symptoms. The measures, aimed at reducing the spread of virus, will impact production schedules and the delivery of goods from the country.
The restrictions affect 18 provinces across the country, including Shanghai, Shenzhen, Qingdao, and Tianjin. Shenzhen, home to Yantian Port, will begin a week-long lockdown, beginning today. Under the restrictions, no one will be allowed to leave their homes except to do three rounds of nucleic acid testing. Other major cities, like Shanghai, have implemented localized lockdowns by cordoning off individual neighborhoods and restricting non-essential business and travel.
Factory production has been completely shutdown in Shenzhen, a major electronics manufacturing hub, after reporting 66 cases over the weekend. Neighboring Changchun, a major industrial base, and Dongguan, a huge factory city, have also halted factory operations. In Shanghai, the localized lockdowns have shuttered some operations, while others continue to operate for the time being.
Yantian Port will officially remain open during Shenzhen’s lockdown, but cargo operations landside will be severely impacted by the city-wide restrictions and COVID-testing requirements. While carriers have yet to release advisories amid fears that the measures will likely extend to other ports, they will likely omit calls to Yantian this week and possibly next week. While terminals at Shanghai, Ningbo, Qingdao, Tianjin, Dalian, Xiamen, and Fuzhou are currently operating normally, volumes and backlogs are expected to increase as cargoes are diverted from Yantian.
Shanghai Pudong (PVG) Airport will close to inbound international passenger flights for six weeks, beginning Thursday. While freighter flights are not expected to be affected, cargo shipments will be affected by the sudden diminished capacity. While we have not been advised of any official restrictions at Shenzhen Airport, airport staff and grounds crews are unable to leave their homes to work at the airport due to the city-wide lockdown.
Trucking operations have been impacted by travel and road restrictions, which inhibit the movement of cargos to ports in the affected areas. Additionally, trucking capacity has been drastically reduced due to the strict COVID testing requirements for drivers. Many trucks are not permitted to enter Shenzhen and cross-border shipments to Hong Kong from the city have been halted, with exceptions for essential goods.
The disruptions are likely to impact spot and short-term freight rates, as demand outweighs available capacity.
In the past week, new cases have also been reported in Beijing, Guangdong, Jiangsu, Shandong, and Zhejiang, and further restrictions will likely be imposed as more cases are announced due to mass testing requirements.
OCEANAIR will continue to monitor the situation and provide updates as more information becomes available. As always, please feel free to contact your account manager or customer service representative if you have any questions or concerns.