Disruptions in Shanghai and the Impacts it May Have on Your Business

China has been at the center of attention for quite some time throughout the pandemic. Much of the early business implications took place in early 2020 as China was the first to enact regulations and pause operations at production facilities. As things improved, these restrictions were lifted, but it’s appearing we may not entirely be out of the clear yet.

Shanghai, a port that is already experiencing heavy congestion, is said to be moving towards even further restrictions due to COVID outbreaks. From the Wall Street Journal, recent news by health authorities shows that over 130,000 new cases of a COVID-19 variant have been recorded since March 1, and Shanghai has actually set a new record over the last three days of over 21,000 positive tests per day.

Shanghai Port Functionality

Chinese officials are insisting that the port of Shanghai is functioning and are urging shippers to continue business as usual, but congestion related data, shipment delays, and logistical insights are suggesting otherwise.

Shanghai went into lockdown at the beginning of this week and is extending the stay home orders and increasing restrictions on businesses that are permitted to continue operations during the lockdowns. According to a few reports, up to 90 percent of truck service to the port of Shanghai has stopped, and the increased restrictions are keeping many trucks from leaving the city.

The increased restrictions and regulations at the Shanghai port are having a massive impact on import cargo which is now suffering from drastically slower pickup times and much longer container dwell times. The container port is currently operating at roughly half capacity.

The issue with the congestion right now is that container ships continue to dock and unload cargo, but the restrictions placed on trucking and factories make it incredibly difficult for truckers to pick up or drop off cargo, causing major grid locks on the port grounds. Containers continue to pile up with little that can be done to relieve the major congestion.

CMA CGM has advised its customers that it is witnessing high stress on yard plug capacities and are suggesting that shippers should consider re-routing options. They are waiving the destination administration fee for customers who decide to COD inbound reefers from Shanghai to other ports. And luckily, for the time being, it seems that other ports are doing well.

Other Chinese ports seem to be operating as usual, so in the short term, it appears that re-routing cargo through these ports may be a more efficient method for shippers. However, all should be advised that other cities throughout the country are beginning to see new cases of the COVID variant. How severe these case counts get, and the government’s response is yet to be known.

Summary

In summary, Shanghai is incredibly congested, and there isn’t any solid estimate as to when congestion may begin to let up. Most likely, restrictions will remain in place until case numbers begin to drop, and until then, truckers will continue to struggle with picking up and dropping off cargo in a timely fashion due to the heavy restrictions.

If you are looking for a strategic solution for cargo that usually flows through the port of Shanghai, or simply have a few questions about what your options are, please don’t hesitate to reach out to one of our team members! We would love to answer any of your questions and help your team in any way we can!

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