Congestion all around, from COVID in China to gridlocks in L.A.
Logisticians, shippers, carriers, and supply chain enthusiasts were very active Wednesday morning as news started to spread from East China: a container terminal at the port of Ningbo has been shut down.
Official sources cite the reason as a single COVID case among the port operators, but wary industry members, still feeling effects of the shutdown at Yantian in June, worry the situation may be worse than it seems.
According to an article in Freight Waves, Chinese authorities terminated all operations at the Ningbo Meidong Container Terminal Wednesday following a dock worker testing positive for COVID-19.
Major players in the industry, like carrier Hapag-Loyd and the freight forwarding division of CH Robinson, told their customers to expect delays for any cargo coming out of the region.
Ningbo is not the only affected area as reports come in of many carriers rerouting ships to the nearby port of Shanghai which is experiencing the worst congestion in three years, according to Reutrers.
The fall out from this incident will not be confined to congestion at Chinese ports alone. Ports, railroads, and warehouses across the world are beyond capacity as container queues continue to grow. In fact, there are over 353 container ships stuck outside of ports around the world waiting to berth. That’s double the amount that was recorded earlier this year.
The United States, where a massive boom in demand has been driving the shipping bonanza we’ve seen in the last year, has been hit especially hard with congestion. The San Pedro Bay Complex, home to the biggest ocean port in the US, once again has over 25 ships anchored outside the ports of Long Beach and Los Angeles.
While the delays faced due to closures and congestion at ports of origin in China may give ports in Southern California a slight respite, the backlog of containers building up in Chinese warehouses and docks will eventually hit and it will hit hard.
To further complicate the issue of congestion, the national retail federation’s forecast for August states that it should be the biggest month ever for retail imports, with an expected 12.6% year-over-year increase. That’s an expected 2.37 million twenty-foot equivalent units hitting the already maxed out port systems in the month of August.
While all the volume that is expected to hit the ports in August is already on the way over the oceans, and will have to be dealt with when it comes, the bigger question is what about the rest of peak season?
Well, that depends on the outcome of the events in China, particularly as it concerns the third largest port in the world—Ningbo. To determine that we turn not to the situation at the ports, but in the air.
As port authorities have partially shut down Ningbo port, around 50% of passenger flights from China to the US and the EU have been suspended. This points to the possibility of a serious breakout in COVID cases in Eastern China, or at least an attempt to control case cumbers in the area.
What does this mean for freight? Delays, and a lot of them.
“For all the importers out there, while there is not much you can do for immediate relief, you should get ready for the backlog that is coming at the 3rd largest port in the world,” said Freight Right COO, Robert Khachatryan, in a statement.
What’s a shipper to do? Stay in constant contact with your freight forwarder and get ready to weather the storm, again.
What challenges will the logistics industry face with the entrance of the COVID-19 vaccine?
When will the current supply chain madness settle down? Well, potentially not until after Easter, some experts say.
USTR's recent extensions to exclusions of imports impacted by section 301 tariffs protect some items through December 31, 2020.