Shanghai is China's most populated metropolis, and one of the world's largest cities in terms of land area. The Port of Shanghai is the world's second-busiest port and the biggest global port of container shipping. With a capacity of 47 million twenty-foot equivalent units (TEU), according to the latest Chinese official data, and it represents 16.7% of the total container shipments in China last year; that represented 4 times the size that was done in the port of Los Angeles.
Background and implications of locking down Shanghai Port
With the recent outbreak of the New Covid Variation, Shanghai confirmed in the previous month that it will continue to use the "zero-COVID" strategy to eradicate a dwindling outbreak in China's largest city. This step hugely created, what was called, “Supply Chain Chaos” Despite a substantial drop in infections in 6 weeks, Shanghai's lockdown has inflicted tremendous costs on the supply chain logistics; given that the Omicron variant has a low mortality rate among those who have been immunized.
The closure of the Chinese port of Shanghai put more pressure on global supply chains, noting that Shanghai is the most attractive destination for international business in China. By the end of last year, more than new 800 multinational companies were established.
As Shanghai port is the busiest in the world for container traffic, and the city itself is considered a major center for aviation in Asia, which makes it the fourth-most crowded center in the world; The city was negatively affected after the high number of cases of the virus infection this year. Last March and April showed a rise to a record level in ships waiting for loading or unloading.
Loosening Shanghai Port Lockdown
Shanghai authorities have previously announced that they will allow more businesses to resume normal operations from the beginning of June after nearly two months in lockdown.
Since the 1st of June, the port of Shanghai's daily operations have nearly entirely recovered from the consequences of the city's COVID-19 shutdown. According to Chinese state media, daily container throughput at Shanghai port has recovered to 95.3% of normal levels.
Despite analysts showing potential concerns about the backlog resulting from disruptions to the port during the lockdown that will likely persist to generate freight forwarding congestion throughout the year and increase the average waiting time. That is because, until late May, there was a backlog of cargo amounting to 260,000 twenty-foot containers that were not transported from Shanghai in April due to the shutdown, asserting that the recovery will also have a long-term negative impact on supply networks.
However, we have collected the recent comparative statistical insights onto the port performance this month compared to the beginning of the lockdown.
Statistical Insights on Shanghai Port Performance until June 2022
According to the most recent statistical insights reflected on container shipping vessels, the most prevalent ship type at the port, Shanghai port fully reopens after two months of lockdown.
The average waiting time for tankers, bulkers, and cargo shipping vessels in Shanghai reached 66 hours during the height of recorded Omicron instances. However, it was reported this month that wait times have been reduced to 28 hours.
Average waiting times for box ships have dropped to 31 hours compared to 69 hours in late April. Moreover, tanker congestion has returned to normal levels, reduced to 18 hours, which is two hours less than the three-year average for this time of year, after reaching an average waiting of 37 hours in the same month.
Meanwhile, bulker traffic is at an all-time low for this time of year. After peaking at 75 hours in April, it is currently 21 hours, which is the same as the lowest average waiting time recorded for this time of year in the previous three years.
It is worth noting that several freight forwarding lines operating in container shipping activity announced in previous April the cancellation of their services in the port of Shanghai, and the reliance on multimodal transport, like railways and air forwarding, as an alternative. Until the situation is resolved.
While the troubled supply chains in Shanghai and other cities were sounding the alarm about potential effects on the global economy and inflation. On a related level, the International Monetary Fund cut the global economic growth forecast by 0.8% to 3.6% in 2022.
What is Next in the Container Situation in Shanghai Port
Though the world's largest port of container shipping has not yet returned to pre-lockdown capacity, most maritime trade lines have arranged to resume operations while Shanghai Port is profiting from a slow rebound in exports and the rising freight forwarding rates.
Officials in the transport sector report that the first two weeks of June 2022 witnessed a significant number of imported and exported cargo shipping operations that gradually crowded the ports following a two-month lockdown. As per the Shanghai Shipping Exchange's index, the increased demand for ocean transport drives up freight forwarding costs.
Accordingly, we can witness promising indicators of normalization after reopening and reoperating the retails and business at the beginning of this month. As China continues to loosen restrictions in most regions of Shanghai, the port operations, warehousing activity, and congestion look to be recovering to normal levels. Shanghai has eased travel restrictions and sought to bring people back to work gradually over the past two weeks.
Waiting times for container shipping vessels, tankers, and cargo ships have been reduced compared to the beginning of the lockdown.
Analysts are still concerned about the negative impact across the global supply chain, as well as the possibility of ports in North America and Europe being challenged by a fresh rise in volumes, rates, and supply chain demand.
In light of the spike in freight forwarding prices following the reopening of the Shanghai port, and under these unprecedented circumstances, relying on a skilled and experienced freight forwarding and logistics services partner always helps:
- coordinate cargo insurance and cargo shipping;
- monitor transportation and 3pl logistics activities in the region;
- cover and follow-up necessary regulations;
- find the right warehousing strategy;
- efficiently manage the overall costs.
Source:
https://www.vesselsvalue.com/
https://en.sse.net.cn/indices/fqaen.jsp