A port shutdown in one of China’s busiest areas is threatening a repeat of last year’s shipping nightmares. Due to a COVID-19 outbreak in the Ningbo-Zhoushan port, China decided to shut down the area until further notice. The Ningbo-Zhoushan port is the world’s third busiest container port.
Ningbo-Zhousan Port Shutdown Due to COVID-19
Last Wednesday, authorities put a stop on all inbound and outbound container services at the Meishan terminal in the Ningbo-Zhoushan Port.
Earlier, an employee tested positive for coronavirus, sparking fears that another outbreak will spread in the area. Even worse, there are fears of a delta variant spread, which can close the port for a longer period of time.
The shutdown is now threatening to further strain an already fragile global supply chain. The timing couldn’t be more problematic, as a key shopping season is approaching.
If the ports stop operating, many items anticipated for the thanksgiving and Christmas seasons are at risk to arrive late. This early, any delays in shipping can lead to further shortages in the market, which can lead to higher prices and lower growth.
If the Ningbo-Zhoushan closure will drag on for months, expect companies to lose on holiday sales.
Port Shutdown Will Create A Big Impact
The Meishan terminal accounts for 25% of Ningbo-Zhousan’s port operations. According to security consultant GardaWorld, “the suspension could severely impact cargo handling and shipping” worldwide. In fact, Germany’s Hapag-Lloyd AG already announced delays in its scheduled sailings.
The Meishan closure is the second time a major China port has closed due to coronavirus. Last May, the port shutdown in Shenzen lasted for a month. As a result, many goods piled up in factories and storage years. This also led to higher freight rates, as demand for limited shipping operations rose.
Los Angeles Port Braces For Delays
Meanwhile, the Los Angeles port is bracing for another slowdown due to the Ningbo-Zhoushan port shutdown. The US port already saw volumes go down last June because of the COVID outbreak in Yantian last summer.
Anton Posner, CEO of supply-chain company Mercury Resources, said that many companies are taking note. Many firms who chartered ships are already adding COVID contract clauses as insurance so they won’t have to pay for stranded ships.
The recent port shutdown is also raising concerns that other ports worldwide will face shutdowns due to COVID. Many economies already felt the impact of delayed shipping of perishable items to electronics.
As a result, many areas are dealing with higher shipping costs and higher product costs. Limited operations are also affecting how companies are handling their reopening.
In a statement issued late Thursday, the management of Ningbo-Zhousan said all other terminals except Meishan will continue operations. They are also meeting with shipping companies and directing them to other nearby terminals.
To minimize the impact of the port shutdown, officials said they’re adjusting operating hours so that clients can clear their shipments faster.
According to Ningbo’s Customs Bureau, the biggest exports passing through this port include electronic goods, textiles, and low and high-end manufactured goods. Top imports included crude oil, electronics, raw chemicals, and agricultural products.
Meanwhile, Ningbo city remains a low-risk virus area, as reported by the city health commission. However, all flights to and from Beijing remained closed.
Watch the DW News video reporting that Port closures in China hamper global supply chains:
Do you foresee many other shutdowns in ports around the world due to delta variants? Also, do you foresee a higher cost of goods within the next few months due to shipping disruptions?
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