In addition to the current global container imbalance, the shipping industry and global supply chain have been hit by yet another crisis, after China’s recent Covid outbreak in Guangdong Province resulted in major delays across the region’s busiest ports. The Yantian, Shekou and Nansha ports were shut down at the end of May, after mass testing revealed transmission of the Delta variant within the community.
Why is the region so important for the shipping industry?
Both the Guangzhou and Shenzhen regions of Guangdong Province play a vital role in the shipping industry:
Maritime trade from Guangzhou, where the Port of Nansha is located, reaches over 300 ports in more than 80 countries. The Port of Nansha is also South China’s fastest growing port.
Shenzhen, where the Port of Yantian and Shekou are located, is one of the top five container ports in the world, handling as many as 25 million TEU (twenty-foot equivalent unit) containers annually.
More specifically, the Yantian port is of major significance for the global supply chain, in charge of ¼ of the entirety of the USA’s and North America’s shipments. It is also one of the biggest volume ports for trade lanes in the world, including the China to Australia trade lane.
What Are The Effects of The Yantian, Shekou and Nansha Port Shutdowns?
Due to the global importance of these ports, particularly Yantian, we can expect major delays and an increase in Oceanfreight rates to all destinations globally.
McHugh & Eastwood are expecting shipping lines to increase their GRI/PSS surcharge for the China to USA/Canada trade lane. These increases will be reflected along the China to Australia trade lane.
While the costs shouldn’t increase in Shanghai or Ningbo ports, we can expect extremely tight space later on, as shipping lines allocate extra space to the Shekou port to accommodate the shutdowns.
How Long Will These Port Delays Last?
While the Yantian Port is set to begin operations again this week, the ripple effect along the supply chain will continue to cause delays. With more than 20,000 TEUs now backlogged, and a predicted 50-60 ships anchored out at Yantian, it will take an estimated 2-3 weeks for everything to go back to normal.
In response to these delays, we are working closely with our team in China to keep on top of all changes and updates as they come.
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