An estimated 260,000 teu of Shanghai’s unshipped cargo is set to swamp the market this summer, making the peak season “even more chaotic” than last year, reports The Loadstar.
Drewry analysis
According to new analysis from Drewry, China lockdowns have stored up problems for a global container distribution system “already severely stressed and facing reduced capacity due to pervasive congestion”.
The analyst said there was little impact on vessel calls when the latest Shanghai lockdown began, but a reduction in calls accelerated from mid-April.
“Drewry estimates that up to 260,000 teu of export cargo was not shipped from Shanghai in April, because of the lockdown. This is the equivalent of 26 fully loaded 10,000 teu containerships that will have to be found somehow in future months as supply chains are reactivated.
“The greatest uncertainty is when China’s lockdown restrictions will end, and the ‘bullwhip’ impact this will have across the supply chain.
“Liner shipping schedules will also take at least one rotation to normalise. This would mean that, even if lockdowns were to end today, the predictability and capacity of the container distribution system would be jeopardised during summer peak season.”
Predications
Indeed, 51% of forwarders, traders and shippers surveyed by Container xChange are expecting this year’s summer peak season cargo surge to be even more chaotic for global supply chains than in 2021.
For example, 58% of respondents reported that China’s lockdowns had made it “hard to produce/ship as much product as planned”, suggesting “cargo backlogs and unsatisfied demand are building as China’s zero-Covid strategy limits exports to Europe and the US”.
Covid and its consequences
Christian Roeloffs, co-founder and CEO of Container xChange, said: “One big question is whether China is going to sacrifice its zero-Covid policy to get trade and its economy moving again. If it does, then there’s every sign that we’ll see a substantial surge as backlogs of exports are shipped.
“If lockdown rules are relaxed soon and truckers are allowed to get back to work, those backlogs will be arriving at the same time as peak season orders, which could cause a lot of supply chain blockages at ports in Europe and the US, where congestion is already widespread.”
However, Mr Roeloffs added that there were very few indicators President Xi was willing to compromise his health policy to boost trade, and other economic factors are in play, too.
He explained: “The other side of this coin is demand. Whether it is GDP forecasts, Purchasing Managers’ Index numbers, rising inflation or consumer confidence, multiple metrics suggest demand could be deflating.
“That could help offset any sudden rush of cargo from China, especially as there are also signs that consumers are spending more on services instead of products.”
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Source: The Loadstar
