China’s zero-Covid policy causes global disruption
China’s lockdowns are global issues worse than those seen in 2020
Experts believe China’s zero-Covid policy could disrupt the global supply chain to a worse extent than seen in 2020, with 30% of the world’s shipping backlog resulting from the country’s lockdowns.
The total number of container ships in port and off the hub’s shared anchorage with nearby Ningbo as at mid-April stands at 230. This is a 35% increase on the same time last year.
Current restrictions are affecting 373 million people in Chinese cities, approximately 40% of the country’s gross domestic product.
The volume of goods usually shipped through Shanghai means any slowdown will affect a range of sectors. It now takes an average of 111 days for goods to reach a US warehouse from an Asian factory, over double the trip length in 2019.
For now, Shanghai’s port has been allowed limited working via a ‘closed loops’ system, where worked are locked inside their workplace. The port is now running out of capacity for certain types of cargo. The Chinese government is attempting to ease congestion by diverting sailings to Ningbo and Taicang, instructing highways are kept open and clean, and diverting airfreight from Shanghai Pudong.
However, this is now creating problems at some other major airports in the country, with Zhengzhou Airport in Henan particularly badly hit. Though some experts are hopeful that China will be able to bounce back quickly, as seen after the 2020 lockdown.
The global implications of the country’s Covid policy are causing issues worldwide with 20% of container ships stuck at ports. Once China’s factories reopen, US ports, particularly along the US west coast, will be hit by a wave of pent-up cargo.
The total container ship count for the dual hub of Los Angeles and Long Beach totalled at least 57 vessels in April, the highest since February.
Trade friction has only been exacerbated by Russia’s invasion of Ukraine, which has caused further port congestion, particularly in Europe. Rotterdam, Antwerp, Hamburg and three UK ports are all working at or above capacity, struggling to accept any more containers because they simply don’t have the space for them. Russia accounted for about 13% of Rotterdam’s total throughput in 2021 and about 8% of container handling.