SHIPPING UPDATE - Why is the Asia ocean freight trade still not catching a break?

Following recent reports of the Coronavirus outbreak at Yantian terminal resulting in a brief closure of the terminal, more positive COVID cases have been confirmed in Shenzhen where Yantian port and Shekou port are located and in Guangzhou where Nansha port is located.

The below impact has been the result:

• Increased congestion and vessel delays of 15 days and more at Yantian port - there are around 40 ships waiting at anchor for a slot to open up in Yantian. To put into context, the number of containers unable to move from South China now has already surpassed the volume of boxes held up in March when the 20,388 TEU Ever Given blocked the Suez Canal in Egypt (source: splash247.com)
• All operations in the western area of Yantian have been suspended until further notice. Origin export containers and transshipment containers have been detained there until further notice.
• Operations in the eastern area of the terminal where mother vessels mainly berth continue to experience low productivity at 30% of its normal level, further adding to the backlog of containers. A shortage of port staff is a result of stringent disinfection and quarantine measures following recent outbreaks
• Several vessels will be omitting their usual calls at the terminals of Yantian and Shekou to minimize schedule disruption due to a backlog of 3 weeks’ worth of containers queuing at the terminals
  • Some vessels have changed route to call Nansha, Shekou and Hong Kong terminals instead of Yantian, putting significant pressure on the terminals unable to handle the increase in containers

What are the wider implications?

As more cargo is diverted to Nansha/other ports and epidemic prevention measures for COVID-19 are also implemented in Guangzhou, the below issues will likely further intensify before easing:

• Container shortage: With carriers omitting ports and containers queuing to be unloaded or taken elsewhere at what is China’s 3rd largest port (Yantian), the existing container shortage has been further exacerbated
• Truck/Road Service: Traffic congestion is resulting in container pick-ups being delayed between 5-10 hours.
• Limitation on laden exports at the port to to reduce the traffic and yard congestion, further increasing container shortage and pressures on trucking companies
• Rates: These issues are further compounding already record-high ocean freight rates out of Asia.

Impact will extend beyond the initially affected Yantian port. By now, the knock-on effect has seen all transport out of Southern China affected.

Mirroring the Suez Canal incident and the issues following the initial Coronavirus outbreak at ports, a chain reaction across supply chains globally may naturally be felt as a result and last into Q3. 

Should you require any further information or want to discuss your supply chain planning, please contact your local Woodland representative or reach out to us here.