Shipment delays between China and major ports in the United States and Europe have quadrupled since late March, when the city of Shanghai, home to China and the world’s busiest container port, was closed, according to Project 44 data, which tracks the global supply chain. became.
By the end of April, the ship from China to Seattle had taken four days longer than expected to arrive, starting about one day last month.
The time it takes for vessels to leave China and reach major ports in the world has steadily increased over the past year, but since December, transit times between Shanghai and Long Beach have been reduced to January and February. There were some signs of easing, such as being done. ..
However, since March, the transit time of the route has increased sharply again.
“Manufacturing is closed [in Shanghai] Josh Brazil, Director of Supply Chain Data Insights at Project44, said:
The delay “lasts until the summer months,” he added, as the factory is struggling to return to normal operations in Shanghai.
Authorities have allowed some companies to resume production, but many workers are still stuck in quarantine at home. The reopening factory is facing a shortage of parts and difficulty in securing trucks to carry goods in and out of the port.
“The ripples of shipping delays are still beginning to emerge and are expected to continue for quite some time in the coming months,” Brazil said.
Shanghai, China’s major financial center and most populous city, has been severely closed since late March. Over 8 million Residents are still prohibited from leaving the residential compound. Covid’s restrictions have spread to other cities, including Beijing, the capital of the country.
Shanghai port Although it remained open throughout the blockade, data from various shipping companies show an increase in ship and container backlogs.
US supply chain companies have expressed concern about the new turmoil towards US ports that are still recovering from the severe congestion and delays they suffered last year.
Sherry Simpson, chief commercial officer of JB Hunt Transport Services, said at the end of last month that “temporary bailouts” were being made at US ports, but things could get worse. This summer is “worse” because of what’s happening in China.
“It takes a bit of confusion to actually change the environment again,” she added.
Ships and containers clog the harbor
Shipment queues are deteriorating in China and elsewhere in the world.
Nearly 20% of the world’s container vessels are currently waiting outside a crowded port, according to a study released last Thursday by Israel-based global maritime data company Windward.
Almost a quarter of those unberthed vessels are stuck outside Chinese ports. That’s 412 vessels, up 58% from February, the study added.
It’s clear that the blockade in China caused a bottleneck, the company said.
President Xi Jinping has suggested this week that China will continue its zero-tolerance approach to Covid. Thursday, Xi has told all levels of government to “resolutely adhere to the Zero-COVID policy.”
China has seven of the world’s top ten container ports, including Shanghai, Port of Ningbo, Shenzhen and Hong Kong. The situation remains the same in Shanghai, the epicenter of China’s current Covid outbreak. severe.
According to the latest data from S & P Global Market Intelligence, the number of vessels waiting at Shanghai Port has increased to 384 by April 25, an increase of 27% from the previous month.
Other Chinese ports are also under pressure as they seek alternative ports for vessels to berth. According to Lloyd’s List Intelligence, ship delays have increased outside Ningbo Funshan Port, the world’s third largest port, within 100 miles of Shanghai since late March.
Due to the shortage of trucks, the containers are piled up.
At the peak of the blockade in Shanghai, according to Project 44 data, containers were moored at the port for 15 days before being picked up by truck drivers, starting less than 5 days when the regulation was first enforced. Since then, the average wait time has been reduced, but last Wednesday was still 10 days.
Shanghai Deputy Mayor Zhang Wei admitted last week that Shanghai has experienced “inefficiencies” and “insufficient logistics” in freight transportation since the blockade.
Manufacturing and trade are hit
The turmoil in the port has already hit Chinese factories and foreign trade, and manufacturers have to wait longer to get raw materials.
Also, shipping is difficult Their products to customers. Due to weak demand and difficulty in finding moving trucks, products are piled up in warehouses, and the inventory of finished products has skyrocketed to the highest level in about 10 years.
Latest PMI Survey — Released on Saturday — Shows that factory activity has fallen to its worst level since February 2020. When China was fighting the first Covid outbreak. New export orders received by manufacturers in April declined at a much faster pace than in March.
According to Goldman Sachs analysts, the decline in export orders has shown that turmoil in several major ports, including Shanghai, has hurt trade with other parts of the world in China.
“Worry, supply pressures have worsened, supplier deadlines have collapsed, input prices have skyrocketed, and finished product inventories have risen in June 2012,” said Mitul Kotecha, Head of Emerging Markets Strategy at TD Securities. There was a lot of evidence that it had risen to its highest ever since. ” Report.
“Such supply pressures will affect the entire supply chain around the world, as already evidenced in a recent US first-quarter earnings report in the tech sector,” he added.
Global inflation rises
Lee Dae-jin, associate director of S & P Global Market Intelligence, said the situation in Shanghai would boost global inflation this year.
He pointed out that last year’s inflation was caused by two factors: supply chain bottlenecks, shortages of key components, and record high container freight rates.
Both problems continue this year, even though Russia’s invasion of Ukraine has pushed up prices for energy and other major commodities and encouraged global inflation.
Lee said consumer prices could rise “much faster than previously expected” due to “another long delay” in the offshore supply of key components due to China’s port congestion.
Maersk said on Wednesday that fares will remain rising as supply chain pressure continues. According to the company, congestion in sectors such as trucking and warehousing in mainland China “has created bottlenecks, made supply chain management services difficult, and increased prices.”
The company’s average fare in the first quarter rose 71% year-on-year.
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