Further supply chain chaos as Shanghai lockdown extended indefinitely
05/04/2022
Shanghai's lockdown has been extended indefinitely, a move that casts more uncertainty on Chinese supply chains, as new data is released showing the impact on China's ocean freight volumes.
As Simfruit pointed out, the major restrictions in the eastern half of the city, including Pudong, were due to be lifted on Friday, but almost all areas remain under lockdown and local authorities have not given any deadline for their end due to the increasing number of infections, noting only that the release of the quarantined areas would be done "in stages".
complicated logistics
The Loadstar highlighted an interview with a carrier who specified that "Shanghai has started another round of massive tests [for Covid], with the entire population of the city, of 25 million inhabitants, subjected to tests (...) They have promised us that all those who test negative will be released and positive cases will be transferred to quarantine centers, as before. Let's see if they finally keep their promises and don't invent new rules”.
It should be noted that currently, almost all of Shanghai is under lockdown. Most residents cannot leave their homes, even to eat, while some businesses, such as the container port, are allowed to operate under "closed-loop" conditions, where workers sleep on site.
Supply chain upgrades by carriers have primarily focused on reducing trucking capacity and closing factories and warehouses, resulting in diversion of ocean freight: Ningbo, Qingdao and Tianjin top the list of alternative ports.
However, according to Crane Worldwide Logistics: “Container shipping remains a challenge. Other cities have become more reluctant to allow the entry of container trucks from Shanghai." Meanwhile, Fibs Logistics, indicates that most container entries in Shanghai have been delayed and schedules are "unstable".
For its part, Ligentia warned its customers that its warehouse in Pudong had suspended operations, with its warehouse under closed management. Crane added that cargo handling at Shanghai Pudong airport had become "almost impossible," noting that Delta was the latest airline to announce flight cancellations, recommending using Zhengzhou as an alternative gateway for air cargo.
Along the same lines, Fibs Logistics added: “Some factories had to cancel their reservations due to the closure of their districts. For consolidation shipments, most Pudong warehouses are closed until further notice."
Such is the logistical chaos, that Reuters reported that the Tesla factory in Shanghai would not resume operations on Monday, as planned. Over the weekend, CEO Elon Musk tweeted that the company had seen an "exceptionally difficult quarter, due to supply chain disruptions."
Amid reports last week of worsening dock congestion and ship queues, Shanghai International Port Group (SIPG) yesterday denied there were "more than 300 ships" waiting to load or unload at the port. .
SIPG told local media that the port was operating normally 24 hours a day and that the average waiting time at the docks for container ships was less than a day.
Meanwhile, new data from FourKites has shown the negative impact of China's lockdowns on ocean freight volumes. For example, the supply chain visibility company said that the closure of Shenzhen last month led to a 32% reduction in the volume of ocean shipments in Guangdong province, where Shenzhen is located.
"The seven-day average shipping volume in Guangdong is down only 15% compared to before the lockdown took effect," added FourKites.
In Shanghai, FourKites points out, the container ports are experiencing a "significantly reduced" volume, with an average seven-day traffic "down 33% compared to March 12."
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