Massive Shipping Delays Expected Across Southern China Backed By Surging COVID Cases

Recent emergence of fresh cases of COVID-19 across various regions of China mainly southern part during second quarter of 2021 is causing severe impact on businesses and overall economy. Congestion reported at containers shipping ports in southern part of China in June 2021 have worsened the situation after mounting COVID-19 cases across Guangdong province and other regions. Guangdong province is one of the largest manufacturing as well as exporting hub in the southern part of the country which reported over 150 cases of new delta covid variant since May 2021 and hence triggered rapid testing and lockdown across various nearby regions to contain the disease spread.

Recently, Ocean Network Express (ONE) Holdings, Ltd., one of the leading Japanese shipping and transportation company recently announced that Yantian International Container Terminal in Guangdong Province would operate below capacity due to COVID-related work restrictions in the region while congestion at container terminals at Shekou and Chiwan has surged to over 90% of capacity. This has caused delays in the deliveries as well as significant impact on logistic chains as Guangdong accounts for about 24% of China’s total exports as of 2021. Hence, the manifold increase in the transportation costs is witnessed which forced companies to pay extra charge to deliver products to ports. Such as increase in the container freight cost from China to Europe rose to a record of $11,037 per 40-foot container, a massive 550% higher than the seasonal average over the last five years.

Additionally, as the shipping crisis has massively impacted the Shenzhen and Guangzhou regions of the country. The companies have to face the huge delays extended nearly to 14 days from 0.5 days in the transportation of vessels to berth at the Yantian International Container Terminal in Shenzhen, China. As per market experts, the shortness in the containers supply and surging freight cost across the country would push the prices further upwards of raw materials as well as the finished products.