Weekly Update – 08.04.2022

Weekly Update – 08.04.2022
April 8, 2022 Hannah Marshallsay

The lockdown in Shanghai resulting from the recent spike in Covid-19 cases in China continues to impact both Sea and Air Freight services. The economic crisis in Sri Lanka is disrupting supply chains, leading to delays in exports from the region.

The Chinese government’s commitment to its zero-covid policy continues as the number of cases soar to levels not seen since 2020. Lockdowns in Shanghai and other Chinese cities are adding severe pressure to supply chains across the country. The trucking industry, which plays a critical role in transporting goods from factories to ports, has been particularly affected. Trucking is being severely impacted by restrictions on drivers and movement in and out of areas with positive cases. The inland bottlenecks are beginning to create sea freight delays due to the build up in goods and orders. The situation is unfortunately causing delays and disruption to the movement of cargo from China to Europe and the UK. 

In the last week the Shanghai lockdown has been extended until further notice, creating added uncertainty over Chinese supply chains. With transportation being diverted away from Shanghai to other parts in China, should the lockdown continue, the impact to the movement of cargo may be severe. While the port in Shanghai is open, large numbers of vessels are queuing to berth. Shipping lines are responding to the situation by diverting vessels to alternative ports including Ningbo and Shenzhen.

Other regions of China are still undergoing smaller lockdowns or are affected by precautionary measures which require testing and inspection of truck drivers leaving and re-entering controlled areas. The situation and level of Covid-19 disruption varies from region to region, below is a summary of the key areas that are currently being impacted.

Shanghai

Shanghai will continue the current lockdown until follow up measures are decided based on the result of citywide population testing. Factories are closed. The majority of trucking services are suspended. We are seeing a worsening impact on the production and movement of cargo for some of our customers’ shipments.    

Xiamen

Factories have reopened. Testing requirements on truck drivers are causing delays to the inland transportation of export containers but the situation is improving. Some customers may experience delays to the production and  shipment of their cargo as a consequence.

Suzhou

There is disruption to land transportation with container trucks from Shanghai not being allowed to enter the Suzhou area. This is leading to delays in the movement of cargo.

Qingdao

Some factories remain in lockdown. Testing requirements on truck drivers are causing delays to the inland transportation of export containers. Some customers may experience delays to the production and  shipment of their cargo as a consequence.

Tianjin

Some areas are in lockdown with factories closed. Testing requirements on truck drivers are causing delays to the inland transportation of export containers. Some customers may experience delays to the production and  shipment of their cargo as a consequence.   

Dalian

Trucking capacity has been reduced and road restrictions between Dalian and nearby cities are increasing which we expect will negatively impact trucking operations in the region. Some customers may experience delays to the shipment of their cargo as a consequence.

Regrettably we expect that there will be difficulties with the movement of cargo and sea shipments from China over the coming weeks. 

Air Freight Impact

With the Eastern provinces in China on near total lockdown, air freight services are being significantly impacted. Air terminals in Shanghai, although operating, are not receiving cargo due to the suspension of trucking services in the region impeding the delivery of goods from factories to airports. There is also a lack of handling staff at airports to process any cargo that is delivered. The situation has resulted in the cancellation of freight flights from Shanghai airports. There is also a reduction in international passenger flights which is adding to the shortage of capacity. The diversion of cargo, along with reduced capacity, is likely to push up air freight rates at alternative airports. It is anticipated that the lack of people to load shipments combined with the lack of airport trucking will create a backlog that will take some time to clear after the lockdown is lifted. 

All of these factors will unfortunately impact customers’ air shipments from China and are likely to incur delays for the coming weeks.

Economic Crisis in Sri Lanka Impacts Supply Chains

Sri Lanka’s two major hub ports in Colombo (which were already under congestion pressure resulting from the Covid-19 pandemic up-ending the global supply chain) are being impacted further by the recent economic crisis in the country.

Feeder vessels have been omitting the ports which has caused significant delays. There has been disruption of the transportation of containers between terminals which has resulted in delays to containers arriving to be shipped on vessels to relevant destinations. This has led to a build-up of containers currently waiting at port pending trucking movement, as a result, further omissions are expected. Carriers are now rerouting via Salalah and Tanjung Pelepas in an effort to reduce the ongoing congestion issues at Colombo.

In addition to the congestion at Colombo ports, power cuts and fuel shortages are impacting local vessel deadlines and delays to the landside trucking operations.

Due to the disruption outlined, regrettably it is likely that customers’ shipments from the area will incur delays. We will contact customers directly affected.

 

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