Covid-19 case leads to bottleneck in China port causing container rates to soar

 In News

Ningbo-Zhousan is one of China’s second busiest port, managing up to 29 million 20-foot containers annually. Recently, due to a staff member at the Ningbo-Meishan terminal testing positive for Covid19, the port had to be closed down, forcing more than 50 ships stranded in its waters waiting to dock. With no news of the terminal, which handles about one-fifth of the port’s total volumes reopening, many other ships have been forced to divert to alternative ports.

News of Ningbo-Meishan’s closure is just the tip of the iceberg for China’s shipping industry since the country has eight of the 10 busiest ports in the world and each of them are running well below normal capacity. Paired with the Ningbo-Meishan closure, ports from Shanghai to Xiamen, including Hong Kong, have long queues of ships waiting to unload. Because of this bottleneck, the cost of shipping rates for containers are soaring through the roof these past weeks. According to an article by Market Watch, an investment news platform, the cost of moving a 40-foot container from China to Europe is currently running at around $14,000, approximately 10 times more than what shipping containers would normally cost.

Leveraging on the market predictions of the shipping industry after looking at the delays at China’s ports, the previous Suez Canal blockage in March as well as other market conditions, Market Watch notes that it is difficult to say whether this price trend is expected to continue.

“As to whether this will continue, it is extremely difficult to say. Some freight companies have ordered new container ships to help address the shortage, but these vessels take two or three years to build so that is not going to make any difference in the short term. What matters is future Covid-19 outbreaks and to what extent China and other major port nations have to impose tough regulations to protect their populations. Perhaps we will be lucky and the situation will steadily improve from here, or perhaps this mismatch between supply and demand will endure for several years,” the investment news platform wrote.

It added, “in the meantime, we can expect inflation to rise as importers pass on the costs of shipping to customers. Given the governments and central bankers were already worried about rising inflation for various other reasons, they could do without this extra dimension.”

You can read the full article here.


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