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Navigating the Bottleneck: Shanghai Port's Covid-Induced Shipping Congestion

Updated on 24/01/2022

Shanghai Port's

Evading Covid-Induced Delays: A Detour to Shanghai

As Covid-induced delays in Chinese ports continue to disrupt global supply chains, vessels have begun to reroute. In an attempt to circumvent these unprecedented delays, a significant number of ships are making a detour, setting their course for Shanghai. However, this choice has consequences; the shift has further fueled congestion at the world's largest container port.

From Ningbo to Shanghai: The Pivot of Shipping Firms

In response to the ongoing situation, a variety of shipping firms and logistics companies have altered their strategies. These enterprises have transitioned away from the heavily affected Ningbo port, which has temporarily suspended several services due to Covid-19.

Simultaneously, these companies have not just pivoted to Shanghai, but also to Xiamen. However, this relocation only adds to the already significant backlog faced by these ports. Let's break down the effects of this transition:

  • Increased strain on Shanghai and Xiamen ports

  • Expansion of the existing backlog in these ports

  • Compromised efficiency in the loading and unloading of cargo

The Rising Tide of Shipping Costs

Over the past year, the shipping industry has been riddled with supply-chain disruptions. As a consequence, shipping costs have soared. As we navigate through the current crisis, these costs are predicted to surge even further. This anticipatory climate poses additional challenges for stakeholders across the global supply chain.

The Ripple Effect: Delays and Backlogs Beyond Shanghai

The mass migration of vessels into Shanghai port has significantly impacted sailing schedules. On average, container ships have experienced delays extending to about a week or even more. However, the effects don't stop there.

The delays in Shanghai have rippled outwards, affecting already backlogged gateways in the U.S. and Europe. This global impact underscores the interconnectedness of our modern supply chain and the vast implications of localized disruptions.

Containing the Outbreak: The Shenzhen Conundrum

In Shenzhen, the challenges compound. Truckers in the area are grappling to contain the Covid outbreak, which has led to the formation of substantial queues. The terminal in Sekou, overwhelmed by this surge, has begun restricting and limiting the acceptance of goods.

Now, full containers can only be trucked in a few days before vessels are due for arrival, as per the new rules set by terminal operators. This change significantly restricts the flow of goods, further complicating an already complex situation.

The Global Impact of Port Congestion

The issue of global port congestion will continue to shape restocking cycles this quarter. This is not only due to the ongoing Covid-19 pandemic, represented by the Omicron variant, but also the impending Chinese New Year closures in China. Both these factors combine to create a perfect storm for global shipping:

  • The Omicron Variant: The recent surge in Covid cases due to the Omicron variant exacerbates the challenges faced by the shipping industry.

  • Chinese New Year Closures: Every year, Chinese New Year leads to a temporary pause in operations, which could intensify the current backlog.

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