Chinese port faces COVID-19 outbreak; global shipments suffer delay

Disruption at the Yantian terminal in China's Shenzhen city after a few workers tested positive for COVID-19 is causing shipment delays. The terminal, which is the third largest globally, was closed for almost a week in May-end after some port workers tested COVID-19 positive.

In a bid to avoid the spread of infection, local authorities have blocked roads and nearby business zones. Even a few COVID-19 cases at ports are likely to cause massive global supply delays.

"The Chinese authorities are attempting to crack down hard on the smallest outbreaks... It only takes a few single cases to shut down large areas. We could see larger impacts," CEO of consultancy Vespucci Maritime Lars Jensen told Financial Times.

Also read: Adani no longer 2nd richest Asian; group loses Rs 1.59 lakh crore m-cap

A clothing factory owner in Guangzhou Leslie Wang told the daily that the situation was nothing short of a nightmare as "the goods have been piled up at the freight company and cannot be shipped at all". Wang has got all her workers tested and kept the production units functional.

Executive Vice President of sea logistics at Kuehne+Nagel Otto Schacht believes the disruption at Yantian terminal is particularly unfortunate as it comes at a time when shipping is entering the peak season. Schacht added that it will take 6-9 months to come back to pre-COVID supply chain reliability.

Vespucci Maritime's Jensen, however, believes that the situation will not become normal before 2022.

The deadlock at Yantian has not only fuelled fears of massive shipment delays. It has also led to a rise in shipping costs which could add to inflation-related pressures and lead to a hike in prices of Chinese exports.

The gridlock at the terminal, operated by Hong Kong-headquartered Hutchison Ports, has impacted operations at ports like Nansha in Guangzhou and Hong Kong and Shekou and Chiwan in Shenzhen.

The Nansha port's Guangzhou terminal has handled additional 38 ships to ensure uninterrupted flow of foreign trade while the productivity of the Nansha port has dropped by 20 per cent.

Edited by Mehak Agarwal

Also read: Fresh COVID outbreak in China rattles trade; stokes fears of disruption