China’s Trade Bottleneck could be Worse than the Suez Canal Blockage

After tens of trillions of dollars in government stimulus around the globe, the demand for goods has never been so high. As a result, China’s factories have been working overtime to produce all the consumer goods households around the world have purchased with their stimulus funds.

In recent months the Delta variant of Covid has been spreading throughout parts of southern China, impacting everything from dock workers to truck drivers.

As of June 10, more container loads of freight were already being impacted than the entirety of the Suez Canal blockage. With the Delta strain continuing to impact logistics and shipping, this backlog may continue to grow despite the best efforts of port officials and shipping companies.

In 2020 the port of Yantian handled the equivalent of 13.3 million shipping containers, including a quarter of all Chinese trade with the US.

Despite its immense size, the Pearl River delta is currently packed with enormous container ships waiting for up to two weeks for berths to open up to dock.

According to shipping brokers, there are currently around 160,000 shipping containers waiting at Yantian alone to be loaded on the dozens of ships currently waiting at anchor.

Maersk, the world’s largest maritime freight company, advised that 64 of its vessels had already skipped scheduled port calls at Yantian and Shekou.

Meanwhile, global shipping costs continue to rocket higher as a result of unprecedented demand for both transport and shipping containers.

Despite Australia’s relative proximity to China, we have not been immune to soaring global shipping costs.

Shipping experts have warned that the current delays would be felt around the world, rippling through the global supply chain.

Between the impact of potential goods shortages and rising inflationary pressures from the impact of the backlog of freight in China, Aussie consumers may face some challenges going forward.

Ongoing price rises may be far more long-lived than many analysts expect. We may see shortages of goods that are sourced from virus-impacted regions, by supply imbalances and virus outbreaks in China.

Image source:

Information and image sourced from HERE.

Written 17/06/21