Closure of ports in China raises fears of closures around the world

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The COVID-19 outbreak that shut down one of the world’s busiest container ports has raised fears that the rapid spread of the delta variant will lead to a repeat of last year’s shipping nightmares.

A spokesperson said the Port of Los Angeles, which saw volumes drop due to the June outbreak of the COVID virus at Yantian Port in China, is preparing for another potential drop due to the recent shutdown at the Ningbo-Zhoushan port in China. Anton Posner, chief executive of supply chain management firm Mercury Resources, said many ship charter companies are already adding the terms of the Covid contract as insurance so they don’t have to pay for stranded ships.

Read more: China partially closes third busiest port in the world, trade risks

It looked as if things were just beginning to calm down, “and we’re now in delta delays,” Emmanouil Xidias, partner at Ifchor North America LLC, said in a phone interview. “You’ll get a byproduct.”

The shutdown in Ningbo-Zhoushan has raised fears that ports around the world will soon face the same kind of outbreak and Covid restrictions that slowed flows of everything from perishable food to electronics last year as the pandemic spread. Contagion threatens to spread to docks at a time when the global shipping system is already struggling to deal with unprecedented demand as economies reopen and manufacturing rebounds.

All other terminals except Meishan are operating normally, the Ningbo-Zhoushan Port said in a statement late Thursday. She said the port is actively negotiating with shipping companies, routing them to other terminals, and publishing information on a real-time data platform.

To reduce the impact, the operating time of other terminals is also adjusted to ensure that customers can clear their shipments. A spokesperson for the port said there were no further updates when contacted on Friday.

The story continues

About 28 container ships docked outside the Ningbo-Zhoushan port area as of August 12 and were waiting for berth space, according to a note from Supply Chain Intelligence Corporation Project 44. The data showed port calls to Ningbo fell to less than 60 ships this week, down 70% From about 200 container ships last week.

Peru is already experiencing delays in some crop trade with China, one of its largest trading partners.

“This whole circuit is disrupted when the ports are closed due to the pandemic,” said Gabriel Amaro, head of the Peruvian agricultural industry group Agap. “What happened at the beginning of the pandemic is being repeated.”

Closing Chinese ports could increase freight rates, which have been on the rise as the shipping industry grapples with bottlenecks during the virus pandemic.

Shipping rates

Diverting ships to other terminals “creates congestion at ports, which is what we’ve all been dealing with during Covid,” John Woopensmith, CEO of Genco Shipping & Trading, said in an interview with Bloomberg TV. “And I see that increase, which will have the effect of driving freight rates higher, whether it’s dry bulk or the side of the container.”

The standard cost of shipping a container from Shanghai to Los Angeles has tripled over the past year. The Baltic Dry index of wholesale shipping rates is up more than 10% since mid-July.

Some ships that docked at Mission Station before the shutdown are suspending cargo operations until the terminal reopens, according to a notice sent to shippers by CMA CGM SA shipping line.

Other ships that normally call at Meishan Terminal will stop at Beilun Terminal instead, according to a statement Thursday from AP Moller-Maersk A/S. It added that one of the company’s ships will bypass Ningbo next week.

“We are working on contingency plans in order to mitigate the potential impact on our vessel schedules and shipping operations,” said Orient Overseas Container Line, a subsidiary of Orient Overseas International Limited by email.

Ningbo is still considered a low-risk area for the virus, according to the city’s health commission, although flights to and from the capital, Beijing, have been cancelled.

Authorities in Ningbo said the docker was fully vaccinated with an inactivated vaccine and received the second dose on March 17. The worker was asymptomatic as of Thursday afternoon. Genetic sequencing showed that he was infected with the Delta strain, and epidemiological investigation showed that the agent had close contact with sailors of foreign cargo ships.

(Adds shipping data, CEO comments starting with the seventh paragraph)

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