China’s Lockdowns Cause Worldwide Shipping Delays

Covid lockdowns in China have wreaked havoc at Shanghai, the world’s biggest container port, and are now causing shipping delays at other major ports around the world. Some Chinese cities, including Shanghai, have started easing Covid restrictions in recent days, but experts say that the damage has already been done, and global shipping will suffer in the coming months. That could exert even more pressure on global supply chains already reeling from Russia’s invasion of Ukraine, and keep inflation running hot.

Data from Project44, which tracks global supply chains, showed that shipment delays between China and major US and European ports have quadrupled since late March, when China shut down the city of Shanghai, which has the world’s busiest container port.

By the end of April, ships from China to Seattle were taking four days longer than expected to arrive, up from about one day the previous month. The time it takes ships to leave China and arrive at major ports around the world increased steadily over the past year, but there had been some signs of relief since December with transit times between Shanghai and Long Beach, for example, dropping in January and February. Since March, however, there’s been a sharp increase again in transit times on that route.

Many truck drivers have struggled to reach ports in China to pick up containers because of travel restrictions and Covid testing requirements. Maersk warned in an advisory last month that trucking services in Shanghai would be “severely” impacted by these restrictions. “With the manufacturing industry being shuttered [in Shanghai] and truckers unable to travel quickly, exports have been reduced, and shipment delays have increased,” said Project44. Delays will “continue into the summer months,” as factories struggle to return to normal operations in Shanghai, he added.

Although authorities have allowed some businesses to restart production, many workers are still stuck in quarantine at home. Factories that do reopen are facing component shortages and difficulty in securing trucks to carry goods into or out of the port.

Trucks wait to load containers at Yangshan Deepwater Port on April 27, 2022 in Shanghai, China / CNN Business

“The ripples in shipment delays are only beginning to become visible and are expected to extend well into the next few months,” said Project44. Shanghai — China’s leading financial center and most populous city — has been under a strict lockdown since late March. More than 8 million residents are still banned from leaving their residential compounds. The Covid restrictions have spread to other cities, including Beijing — the nation’s capital.

Shanghai port remained open throughout the lockdown, but data from various shipping firms show an increasing backlog of ships and containers. US supply chain companies have expressed concerns about fresh chaos heading towards American ports, which are still recovering from the severe congestion and delays they suffered last year. An American transport company, said late last month that while there has been “a temporary relief” at US ports, things may get a lot “a lot worse” this summer because of what’s happening in China. It “just takes a little bit of disruption to really change the environment all over again,” they added.

Shipping Delays as Container Ports Suffer

Shipping queues are getting worse in China — and other parts of the world. Nearly 20% of container vessels globally are currently waiting outside congested ports, according to a survey published by an Israel-based global maritime data firm. Almost a quarter of those unberthed ships are stuck outside Chinese ports. That’s 412 ships, up 58% since February, the survey added. It’s clear that lockdowns in China have caused a bottleneck, the firm said.

Across China, at least 27 cities are under full or partial lockdown, which could be impacting up to 185 million residents across the country, according to latest CNN calculation on Wednesday 4th May. 

Beijing effectively shut down its largest district last week. President Xi Jinping signaled this week that China would continue with its zero tolerance approach to Covid. On Thursday 5th May, Xi told all levels of government to “resolutely adhere to the zero-Covid policy.”

China is Home to 8 of the World’s top 10 Container Ports

China is home to seven of the world’s top ten container ports, including Shanghai, Ningbo-Zhoushan, Shenzhen, and Hong Kong. In Shanghai — the epicenter of China’s current Covid outbreak, the situation remains severe. The number of vessels waiting at the Port of Shanghai had increased to 384 by April 25, up 27% from a month earlier, according to most recent data from S&P Global Market Intelligence.

Pressure is also building on other Chinese ports, as vessels try to find alternative ports to berth. Ships have faced growing delays since late March outside Ningbo-Zhoushan port, the world’s third largest port, less than a hundred miles from Shanghai, according to Lloyd’s List Intelligence. Containers are also piling up because of truck shortages.

At the peak of the lockdown in Shanghai, containers were sitting for as many as 15 days at the port before being picked up by truckers, up from fewer than 5 days when the restrictions first took effect, Project 44 data showed. The average wait time has since come down but was still 10 days on Wednesday 27th April. Zhang Wei, vice mayor of Shanghai, acknowledged last week that the city is seeing “reduced efficiency” in cargo transport and “poor logistics” since the lockdown.