Guangdong Port Congestion Affects Global Supply Chain?

"Congestion at container ports in southern China paralyzes world trade".Russia's Kommersant reported on the same topic on January 15 that an epidemic in China's Guangdong Province, one of the major centers of global container trade, had disrupted work at the world's largest single terminal, Yantian Port in Shenzhen, Guangdong Province, and other major ports in southern China, resulting in congestion.

Some analysts believe that the impact of the southern Chinese port congestion may be more serious than the blockade of Egypt's Suez Canal by the cargo ship Changci in March.Some experts said that the "shutdown" of Yantian Port to some extent will have a significant impact on international logistics and global supply chain, but the global logistics and trade blocked, not a day, is the result of a variety of factors.

Yantian port business has been restored to 70%

Shenzhen Yantian Port is responsible for more than one-third of Guangdong's import and export trade, and a quarter of China's trade with the United States. The backstock of containers has not been completely relieved.Yantian International said in a statement on Monday that its overall operation capacity has been restored to about 70% of normal, but it will not be fully restored until the end of June.

Given its important role in China's imports and exports, capacity at Shenzhen's Yantian port has fallen and the impact of the container backlog is still being felt.An outbreak of the virus in China's shipping hub of Guangdong Province has reignited a global shipping crisis, CNBC reported Monday.The discovery of COVID-19 infections at the port of Yantian in Shenzhen on May 21 led to the suspension of port shipments and increased pressure on the international shipping industry, the Wall Street Journal reported on May 15.

It is reported that last year, the container throughput of Yantian Port in Shenzhen was nearly 50 per cent higher than that of Los Angeles, the busiest container port in the US.In the first quarter of 2021, the container throughput of Yantian Port increased by 45% year on year.According to the Wall Street Journal, some ships have been waiting up to two weeks to load at Yantian port since the Shenzhen outbreak, and there are about 160,000 containers waiting to be loaded, according to shipping brokers.Some analysts say work at Yantian Port is running at only 30% of normal levels and delays could last several weeks.

Ships moving in and out of Shenzhen's port have slowed down since the outbreak of the disease on May 21, a staff member of an international freight forwarding company told reporters Wednesday.Yantian International staff also told reporters that international cargo ships are still trickling into the port, but need to queue up.

The "port jump" has a knock-on effect

The latest Guangdong outbreak has affected not only the Yantian port in Shenzhen, but also the nearby Shekou ports in Shenzhen and Nansha ports in Guangzhou, Russian newspaper Merchant reported.To avoid congestion, some ships have gone to alternative ports at Nansha, Shekou and Hong Kong, but there is no room for all the backlog.Shenzhen, Guangzhou and Hong Kong are among the top ten container ports in the world.

Unable to dock at Yantian port on schedule, Danish shipping giant Maersk, COSCO Shipping and other companies began to arrange large-scale jumping from the port, thus topple the dominoes.According to CNBC, Sherina Kamal, vice president of supply chain risk analysis platform EverStreamAnalytics, the average waiting time for ships at Shenzhen's Yantian port has soared from 0.5 days to 16 days, and the backlog will have a ripple effect on other ports.However, with the rapid control of the epidemic in Guangdong, port congestion is easing.

Zhong Zhechao, founder and CEO of One Shipping Company, told the Global Times on Monday that May and June are the international shipping consolidation period to prepare for the peak European and American markets in August and September.But what's happening now is that international shipping has been at a standstill since the outbreak began.As you can imagine, the international shipping season in August and September after the grim situation.In fact, the whole industry is not optimistic about international shipping for the whole year.

Like the Suez Canal jam?

According to the Russian daily Merchant, experts believe that the congestion of these Chinese ports has had a far worse impact on maritime trade than the blockade of the Suez Canal cargo ship Chang Ci.On March 23, the 400-meter-long cargo ship Chang Chi ran aground in the Suez Canal, and a rescue effort in the past few days has added to the congestion at ports in Europe and elsewhere.

Different from the influence of the Suez Canal which is mainly concentrated in the Sino-European trade, the negative impact of the Shenzhen port operation is more on the Sino-American trade.David Wiggins, vice president of corporate development at shipping software company 3GTMS, told CNBC that the crisis at China's ports will have a greater impact on U.S. consumers because many of the goods affected are bound for North America."This is a big, busy port," says an executive at Maersk. "Delays in this port have a ripple effect in the global supply chain."He said products sold by the nation's first and second largest retailers, Wal-Mart and Home Depot, would be affected.

The largest port in North America is in Los Angeles, which has been crowded since the outbreak, Chung said.Europe's second largest port, Hamburg, was also severely blocked after the Suez Canal blocked ships in March.In May, Yantian Port was blocked, and part of the operation area was semi-parked for a long time. This is a kind of superimposed effect, and the global supply chain has been impacted by this continuous ship blocking incident.

Sergei Paskakov, head of the Russian Railway Freight Logistics Group, said the company's electronic deliveries would be delayed by congestion at Chinese ports.But he said China has rich experience in fighting the epidemic, is currently undergoing mass vaccination, and expects the situation to stabilize in late summer or early fall.