China port closures cause panic in global supply chain
Partial closure of ports in China as a result of an increase in Covid-19 infections is expected to cause shortage of commodities globally in the next few weeks, with Africa likely to be most affected.
China is one of Africa’s leading market sources, with data indicating that China-Africa trade reached $185.2 billion between January and September 2021, up 38.2 percent year on year.
China’s northeastern city of Dalian reported its first cases of Omicron last week from two travelers, becoming the second major Chinese port to be struck by the highly contagious Covid variant after Tianjin, a port neighbouring Beijing.
Some shipping lines have suspended operations as at least three Chinese ports, including Shanghai and Shenzhen, remain partially closed. The shipping companies said they are re-assessing the situation before resuming operations.
Ships looking to avoid Covid-induced delays in China are causing growing congestion at the world’s biggest container ports.
Shipping lines like AP Moller-Maersk A/S and CMA CGM are skipping the Ningbo port after its closure, according to Simon Heaney, senior manager of container research at Drewry Shipping Consultants.
Japan’s Toyota and Germany’s Volkswagen have both suspended factory output due to partial closure of the Chinese ports.
The companies prefer to divert shipments to other ports rather than wait outside Ningbo for an unknown length of time.
Some other ships, however, are waiting at a shared anchorage for the Shanghai and Ningbo ports.
With outbreaks now recorded in other ports there’s an increased risk of China denying ships berth and with cities like Tianjin on lockdown, truck drivers are unable to haul cargo from factories to ships and vice versa. Supply chain watchers are now increasingly concerned about the flow of goods from the country’s factories. The shipping industry has been plagued by recent disruptions, which have driven freight rates to record highs.
About 20 million people in China, most of them in the city of Xi’an in the west and Henan province in the east, are in lockdown as the country tries to contain the Omicron variant of the coronavirus.
The Chinese aviation regulator has in recent weeks cancelled more than 60 scheduled flights from the US over Omicron fears.
Source: The East African