Date: Monday, April 12, 2022
Source: Sourcing Journal
Shanghai’s lockdown, extended indefinitely last week, continues to wreak havoc on the global supply chain.
The city’s original plan to implement a two-phased approach to testing and quarantining its more than 25 million residents was expanded to a city-wide shelter-in-place order amid a rise in new cases as China continues to maintain its strict zero-Covid policy.
The result has been continued challenges in moving goods for a country that’s already seen supply chain disruptions from stay-at-home orders implemented in other major port cities last month.
Ocean carriers and logistics companies issued a number of service updates on Friday that signaled increasing challenges facing many companies’ supply chains.
CMA CGM “observe[d] massive impact on both trucking movements velocity and available trucking capacities,” resulting from the Shanghai lockdown.
“These factors have a major impact on import cargo that suffer drastically slower pick-up time and therefore excessively stretched dwell time, which results in high stress on yard plug capacities,” the company warned customers, while also saying it “highly recommended” companies explore alternate routes for refrigerated cargo.
Maersk also referenced trucking challenges in an advisory to customers Friday, describing the situation as “dynamic [and] subject to change.” Drivers are required to show proof of a negative nucleic acid test result in order to move cargo, creating a number of logistical slowdowns.
“Specifically, we foresee the efficiency of Maersk trucking service from/to Shanghai will be further impacted due to the lockdown on Shanghai,” the company said.
Maersk suggested rail or barge as possible alternatives for regional goods movement. Meanwhile, the ocean liner said it continues to see more canceled flights and shifts to alternate airports in the country.
Maersk also said a number of its vessels will now skip service to the Port of Shanghai.
Ocean Network Express (ONE) said it continues to closely watch the situation and noted “trucking availability is very limited, and this has impeded clearance of import cargoes.”
Logistics firm Geodis said Thursday there would be 38 blank sailings, or skipped service, on ONE’s trans-pacific, Asia-Europe, Mediterranean and intra-Asia routes between April 4 and May 8. Meanwhile, Geodis said it counted at least 36 blank sailings at Shanghai among The Alliance group of carriers—consisting of ONE, Hapag-Lloyd and Yang Ming Line—and six for the Ocean Alliance, which consists of Cosco Shipping, Orient Overseas Container Line (OOCL), Evergreen and CMA CGM.
Ocean carriers form alliances to pool their vessel resources in a bid to keep prices low and expand their service areas.
The lockdown, Geodis said, “casts further uncertainty over the supply chains of the whole China as well as the rest of the world.”
Ningbo, Qingdao and Tianjin have all been cited as port alternatives, while south China is seeing fewer restrictions on goods movement, Geodis reported.
Seko Logistics reported some congestion at the Port of Shanghai with wait times ranging from one-and-a-half to three days and container yard crowding due to empty containers not being picked up in a timely manner.
China’s zero Covid policy set off a number of lockdowns last month that proved a strain on global supply chains as the government set to tamp down on rising cases seen in cities such as Shenzhen and Hong Kong.
“Land transport remains the biggest obstacle in the current situation,” digital freight forwarder Forto said in a customer update Friday.
Meanwhile, a backlog of empty containers is building, while air cargo faces rising rates and warehouse productivity levels have slowed, Forto said.
“As in Shenzhen, Hong Kong and other regions of China, such as the Yangtze Delta, the lockdown in Shanghai will also have an impact on global supply chains,” Forto said. “So far, it is unclear when the situation in China will fully normalize. This also depends, among other things, on whether the Chinese government will at least partially abandon its strict no-Covid policy.”