Predictions of supply chain ‘chaos’ as Shanghai resumes shipping

Drewry estimates 260,000 TEU exports went unshipped in April from Shanghai (file photo)

Posted on 18 May 2022 19:56 by

The Maritime Executive

Predictions are mounting in the shipping industry of further disruptions, backlogs and even possibly ‘chaos’ as China scrambles to ramp up operations in Shanghai and resume manufacturing and supply operations. supply chain after the eight-week lockdown due to its zero tolerance COVID-19 policy. Vessel hijackings increased rapidly from mid-April leading to an increasing amount of unshipped export cargo and now the restart of operations is expected to happen just as the shipping industry heads traditionally toward a peak season as retailers build inventory for late summer and then holiday season sales in the United States and Europe.

A new survey of 200 people from across the container logistics industry conducted by logistics platform Container xChange predicts that this year’s summer peak season cargo surge will be even more chaotic for chains. than the 2021 peak shipping season. Half of respondents to the latest Container xChange “xChange Industry Pulse Survey” said they expect the 2022 peak season to be “worse” than last year. last. A further 22% expected similar challenges through 2021, while just a quarter said they expected this year’s high season to be less chaotic than in 2021.

This comes despite the dramatic progress made by ports around the world in reducing or eliminating their backlogs. In the United States, for example, Charleston recently declared that its congestion was eliminated with at most one or two container ships waiting at anchor. Similarly, the twin ports of Los Angeles and Long Beach report that they have reduced congestion by two-thirds. The Marine Exchange of Southern California reported yesterday that only seven container ships were waiting at anchor, with 30 others having made reservations and slowing down or waiting further offshore. This represents a drop from the peak of more than 100 container ships waiting in early 2022.

The weekly number of ship calls by port shows the dramatic decline in Shanghai in recent weeks (source Drewry)

Maritime research firm Drewry highlights the impact of the Shanghai shutdowns on container shipping. They indicate a slow initial decline in the number of ship calls at Shanghai. Using AIS data, they calculate that “between the start of the shutdowns in week 11 and last week (week 18), the number of weekly calls in Shanghai fell by 2.5 calls per week while ‘in Ningbo and Qingdao, the number increased by an average of 1.1 and 0.5 per week. That said, the reduction in port calls at the Port of Shanghai has accelerated significantly since mid-April…the total reduction (over the past three weeks) was 31, or 26%, including 25 last week.

The peak container shipping season traditionally occurs in the third quarter of each year as retailers stockpile. Container xChange points out that freight increases last year led to record freight rates for container shipping, delivery delays, port congestion and a decline in the reliability of container shipping services. A third of respondents to their survey said they were ensuring customers received enough inventory by “shipping early” in 2022, while another quarter said they were using alternative routes this year.

“Predicting exactly what will happen during this year’s peak season is harder than normal because there are so many conflicting signs and intangibles,” said Christian Roeloffs, co-founder and CEO of Container xChange. Saying that if China proceeds with easing its lockdowns and restrictions, he predicts “everything indicates that we will see a substantial increase as backlogs of exports are shipped. If lockdown rules are eased soon and truckers are allowed back to work, these backlogs will arrive alongside peak season orders, which could lead to many supply chain blockages at ports around the world. ‘Europe and the United States where congestion is already prevalent.

Drewry estimates that up to 260,000 TEUs of export cargo were not shipped from Shanghai in April due to the lockdown. In their analysis, they note: “That’s the equivalent of 26 fully laden 10,000 TEU container ships, which will have to be found one way or another in the coming months, as the chains of supply are reactivated.”

Given that the peak summer season is normally busier, Drewry concludes Shanghai’s rebound is likely to support a strong peak season and further capacity shortages.

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