Could Lockdowns in China Cause Problems for Domestic Trucking?
Every time a major event happens in the shipping industry, it exposes just how interconnected everything is in logistics. In recent news, industry experts, port workers, and carriers are all warning that the overseas Covid lockdowns in Shanghai could have major ramifications on domestic trucking in the U.S.
Lockdowns went into effect in Shenzhen on March 12, and the ripple effect is already being seen. Two-week average for container volume was down 36 percent by April 20. However, port volumes did happen to climb a bit up, putting container volume down by 20 percent the next week (April 29), indicating a 16 percent bounce back.
The issue with lockdowns isn’t just the temporary ceasing of activity, but also the surge in cargo volume and movement immediately after as manufacturers attempt to make up for lost time. The lockdowns in Shenzhen and Shanghai affect local producers in the U.S. who rely on Chinese-sourced components for production. What this means for the trucking industry is that not only does cargo from the port slow down, but cargo slows down everywhere. Whether it is from warehouses or producers, manufacturing and inventory comes to a standstill.
Industry experts predict that another two to four weeks of lockdowns could cause major disruptions in U.S. logistics if it extends that long. The surges in cargo following port lockdowns often lead to: grid locks on port grounds; an imbalance of workload and labor force; and undue pressure on carriers who are already short on equipment, notably chassis.
The current narrative is that the bottlenecks being experienced in China will essentially transfer to U.S. port grounds and trucking once restrictions are let up. The influx of imports may be extreme and result in increased offshore ship queues. The problem with the current lockdowns is that they are specifically affecting Shanghai, which is one of the largest commercial ports that China has, and one of the primary ports that Southern California receives the majority of its freight from.
At this point, it’s a bit of a waiting game. No one knows for sure when the lockdowns will let up, but regardless of when it happens, we will experience some degree of ramifications in domestic U.S. trucking. The longer the lockdowns last, the more extreme the ripple effect will be on manufacturing, production, and the shipping industry at large.
If you would like more information regarding this topic, contact our team at InterlogUSA and we will be happy to assist you on any questions or comments you may have! In addition, we have our weekly market updates that can provide you with relevant freight news, updates, developments across the industry, and more.