Only a small fraction of the city’s vast manufacturing has been allowed to restart, under closed-loop conditions, Mr Gronen noted, although this is forecast to be extended soon.
“Trucking is still subject to daily PCR tests for drivers and Shanghai and local road permits are required to enter the cities in Jiangsu province,” he added. “The local permit must be applied by local manufacturers, it can’t be done by an agent or the trucker. And further PCR testing rules may still apply and are often imposed at short notice.”
Efficiency
Mr Gronen said terminal efficiency at Shanghai’s Yangshan port was low, which was “not surprising” after four weeks of closed-loop working conditions, he said.
“There are delays of three-to-seven days before a ship can call at the quay, but it’s far from a doomsday scenario. The May blank sailings on various loops will increase rather sharply now, with liners omitting Shanghai more and more.”
MSC, for example, has announced a blank sailing for its Asia-Europe Lion/AE6 service with Maersk, from Ningbo to Felixstowe, via Shanghai. One contact told The Loadstar carriers were “at loggerheads over whether to sail with half-empty ships, or void the call.”
The zero-virus approach
Elsewhere, with Beijing the next likely “lockdown candidate”, Mr Gronen said Shanghai couldn’t expect “any relaxed treatment” and “the zero-virus approach will likely be pursued until the very end”.
Indeed, across China, even as one city opens up another is targeted for mass testing, such as in Beijing, while Guangzhou is again on the watch list, with the city’s airport – already awash with cargo diverted from Shanghai – cancelling all domestic flights yesterday due to “suspected cases”.
Seko Logistics said no cargo schedules had been affected yet, but added: “There is an impact to the speed of cargo entering the airport warehouse and ULD building, and slower customs declarations. This is due to some staff and customs officers needing to lock down at home and queue for Covid testing.”
However, Jimmy Hu, business development manager at YAD Supply Chain Logistics, said: “Flight cancellation decisions will have an impact on some international cargo flights, such as Air China departing from Guangzhou.”
Lockdown
At Shanghai Pudong, forwarders said the main bottleneck continued to be the lack of trucking capacity nearly five weeks after the lockdown began. Mr Hu said it was “completely beyond normal imagination” for services at PVG to be disrupted for so long.
But, on the plus side, he added, airlines had been offering promotional rates for ex-China airfreight, prior to next week’s national holiday.
Kuehne + Nagel CEO Detlef Trefzger said this week in an earnings call that the biggest issues with the Chinese lockdowns were not transport capacity, but production.
“China is exporting, but it’s fewer exports, and it’s more selective, and it depends on production capacity more than port and trucking capacity. We would expect at the moment, and it’s our guess, that we see an export reduction in China of 15%.”
But he added that experience of Chinese lockdowns in the past two years meant “we shouldn’t underestimate the power of China and the reincarnation of its trade, it depends on production and manufacturing capacity, raw material imports”.
He said he thought the bounce-back could happen “within weeks” as exporters geared up for the peak season.
“For this, you need production up and running again. I think that will be part of the focus activities of the Chinese government.”
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe
Source: The Loadstar
