From washing machines to solar panels to electronic components and textiles. These are just a few of the many products being halted at the Port of Shanghai, China, due to lockdown restrictions due to the increase in Covid19 cases. With the spread of the Ômicron variant, immense traffic jams formed on site, which caused a veritable bubble to form in the largest port in the world. The situation is becoming more critical every day and may take months to resolve, that is, many goods will surely take time to arrive all parts of the world.
Low productivity
Mike Kerley, CEO of Janus Henderson, says the restrictions mainly affect the roads to and from the port, resulting in a backlog of containers and a 30 per cent drop in productivity.
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In 2021, the port of Shanghai accounted for 17% of China’s container traffic and 27% of exports. There is also a lack of manpower to process the documents that ships need to unload their goods or carry out the predeparture inspection.
Now boats are also queuing up on the shore and in the canals around the harbor, waiting for the green light to moor.
Data from consultancy VesselsValue shows how waiting times for tankers, bulk carriers and cargo vessels have increased.
Image: Reproduction Twitter
Economic recovery under control
Another concern is that thousands of containers are piling up at the port, once again putting the global supply chain at risk, just as analysts were confident of a postpandemic recovery. Although the port remains operational, it is increasingly congested.
The European Union Chamber of Commerce estimated that 40 to 50% fewer trucks were available in Shanghai and that less than 30% of the Shanghai workforce is able to return to work.
The measures imposed by China in this new wave of Covid19 stipulate that anyone diagnosed with the disease must be quarantined, even if they do not show any symptoms.
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catastrophic effects
The forecasts are not encouraging: the impact of the traffic jams is expected to last until the end of the second quarter. And that even with a possible normalization. Otherwise it will take even longer.
Exports via Shanghai account for 30% to 50% of everything leaving China, meaning the world is on the brink of collapse to receive the produce.
Post on Twitter shows situation in Shanghai port; The congestion is not expected to be resolved in two months. Image: Reproduction Twitter
The world’s largest shipping company, Maersk, issued a statement saying that “several ships will skip the port of Shanghai on their routes” due to a lack of available space for containers.
The global consequences will certainly be a slowdown in import flows and the entire production chain, which will have an impact on rising inflation.
“There are major concerns that exports will be impacted and inflation will affect the world, including Latin America, which is a key trading partner for China,” said Alicia GarcíaHerrero, chief economist for AsiaPacific at investment bank Natixis. . .
“Because the port’s capacity is not the same as it was in March or February, it will take time to resolve all of this. Even if the city’s lockdown ends tomorrow, there is a capacity build that cannot be resolved quickly,” Rodrigo Zeidan, a professor of economics and finance at NYU Shanghai, told the BBC.
Via: BBC
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