Shanghai and China supply chain update

Even with tiered restarting of manufacturing and partial lifting of the lockdown in Shanghai, the situation across China remains challenging, with a total of 56 sailings blanked over the next four weeks.

Despite press reports of a further COVID clampdown in the city, Shanghai has seen some gradual improvements in the last few days, with each local district imposing rules based on the development of cases In the Pudong area, but the situation remains fluid and most areas are under some restriction measures. 

Some big factories are back to operating under closed-loop regimes, with others waiting for the approval to start, but the Metro and public transportation are still closed, making it very difficult for staff to travel to their workplace. 

Shanghai’s airport and container terminals have remained operational, but COVID-safe working practices and the fluctuating availability of workers, has impacted operational capacity and vessels’ service, with longer waiting times and now blanked sailings.

The most significant and recurring problem has been restrictions limiting road transport collections and deliveries to the ports and airport.

Lockdown restriction measures have closed many highways normally used by truckers, with road transport costs and waiting time costs, for repeated testing, soaring during this time. 

Sea freight lead times to North Europe have grown 27%, as a consequence of export cargo disruptions, with resulting sailing cancellations and the UK suffering the worst impact due to the carriers’ port rationalisation strategies.

The continuing lockdown in Shanghai, is resulting in a drop in export bookings of c.40% and the carriers response is to implement blank sailings, to keep supply aligned with demand, with 56 sailings blanked over the next four weeks (an 8% cancellation rate.)

Air terminals are operating, with major airlines continuing to operate services. The problem is restrictions limiting the transport to/from the airport and low volumes of cargo transported to the airport due to the restrictions for road transportation and much cargo diverting to other airports in the region. 

Rates for air transport have softened, because so many factories have been closed by the lockdown and the limited availability of road transport to deliver export cargo, while road transport and waiting time costs have soared.

For exports, our team can assist with potential re-routing of cargo where possible. For cargo outside of Shanghai, it can be transported to other airports and for import, we recommend the use of other airports in the region. 

In other regions………

GUANGZHOU
Airlines are operating, but ground handling staff are limited, which is increasing time to process inbound and outbound shipments. Some consignments are being rerouted via SZ. 

HONG KONG
Trucking between China and Hong Kong is still impacted by capacity limitations, with long waiting times and limited driver availability, which is driving up prices and increasing use of feeder services.

NINGBO 
Since the lockdown started in Shanghai, shippers have been re-routing shipments via Ningbo, increasing pressure on trucking services, container terminals and local warehouses, which are very congested. There are long truck queues for delivery and cargo unloading, with some waiting up to three days. 

QINGDAO
Air, ocean, transport and warehouse activities are normal.

SHENZHEN
Factories and office are mainly closed, while airports, sea ports and terminals are operating. Limited trucking capacity is reducing cargo throughput and increasing waiting times for vessels. 

XIAMEN 
Local trucking, freight, warehouse, and terminals are operating normally. 

Our network partners in China are expecting current issues to continue towards the end of the month, before the situation will start to improve. We are anticipating a massive increase in demand, when Shanghai reopens and that pent-up demand will create a lot of pressure on transport and handling infrastructure.

We would urge you to contact us now and share your likely requirements from China over the next few months, so we can ensure your freight ships promptly.

Colin Redman, managing director. colin@psaplon.com