Just as the blockage of the Suez Canal threw a major wrench in maritime operations earlier this spring, congestion at Yantian port in Shenzen, China has put a halt to operations. Major shipping companies are warning their clients about the congestion situation at this port after several asymptomatic cases of COVID-19 were discovered. The port’s loading and unloading, container pickup time, and ship berthing have all been affected.
Yantian port is one of the busiest in the world, serving about 100 ships a week. The Shenzen Transportation Bureau states that it achieved a cargo throughput of 13.34 million twenty-foot equivalent units (TEU) in 2020. The port, which was recently expanded, has become a major hub for European and U.S. routes.
COVID-19 Cases Slow Port Operations
As a result of COVID-19 cases among five port staff, the port has put stricter virus control methods in place such as comprehensive quarantine and disinfection methods and mass nucleic acid tests, which have slowed operations considerably. The port has improved its COVID-19 testing program for imports and cargo shipments into China, which is adding to the delays. Although port workers are discouraged from speaking to the media, a person close to the port said, “There are not as many (virus) cases in Yantian as the nearby cities. But more rounds of nucleic acid testing will need to be done. Thus it will take some time until the port resumes full operations.”
Without the proper staff and a slowdown in operations due to COVID measures, the busy port has no way to meet the demand of incoming vessels. At the end of May, more than 40 container ships were anchored and waiting to offload at the port as it temporarily suspended accepting any export container ships. Traffic jams around the port occurred as vehicles were attempting to enter it. The port is expected to resume acceptance of export containers on June 3rd, however, the delays are expected to linger.
Carriers’ Response
This situation has created a backlog in the container yard and congestion that will take some time to clear up. Maersk, the container line shipping giant said it expects that congestion and delays will last at least 14 days, if not longer. Some container lines will skip stopping at Yantian altogether or be re-routed to other ports. Shipping firms like Hapag-Lloyd, COSCO, and ONE also alerted their customers that the delays and congestion might mean that Yantian will not be called on in the next few weeks until the port clears. Chinese authorities have told some vessels to divert to other ports such as Shenzen’s west port and Guangzhou’s Nansha port, which continue to operate under normal circumstances despite the COVID-19 outbreaks in the area.
Those container lines that will skip stopping at Yantian altogether or are re-routed to other ports will most likely have shipments that are delayed as well. The situation is expected to continue for the next week, or longer, which will, of course, create further disruptions with international maritime shipping.
Rates May Increase
These disruptions and delays will put additional pressure on the already inflated costs of shipping goods from China. Rates have already been at record levels due to record export demand, and container and equipment shortages. Container freight rates from China to Europe just reached a record high of $10.627 (per 40-foot container unit). This could increase the price of China’s exports even further, which in turn will cause a rise in global inflation.
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