Ningbo terminal shutdown fuels fears of China port congestion spread
Greg Knowler, Senior Europe Editor, and Keith Wallis, Special Correspondent | Aug 11, 2021 12:56PM EDT
The Wednesday closing of a Ningbo container terminal after a worker tested positive for COVID-19 is raising the specter of a Chinese port meltdown, given officials’ aggressive effort to contain the pandemic and pre-existing vessel congestion in Ningbo and nearby Shanghai.
The Ningbo Meidong Container Terminal, also referred to as Meishan terminal, suspended operations 3:30 a.m. local time after a worker for an undisclosed carrier tested positive on Tuesday, according to Reuters. The risk is that as congestion builds at Ningbo, China’s second-largest container port, it will spread to other ports, as happened when Yantian International Container Terminals (YICT) partially shut down for four weeks from late May, congesting neighboring marine terminals in Southern China.
As of Wednesday, there were 28 container ships at berth and anchored in Ningbo, totaling 186,749 TEU in capacity, according to AIS Live, a sister product of JOC.com within IHS Markit. There are 113 container ships totaling approximately 417,000 TEU in capacity at the Port of Shanghai, the world’s busiest cargo gateway.
Chinese efforts to combat COVID-19 infections have also spread to air cargo, with SEKO Logistics reporting freighter flights to and from Europe and the US have been suspended until the end of August.
“The main issue is if Meishan is closed for some days or one week, there will be a big impact at the other terminals, too,” Mauricio Fisch, director of Ocean Express, a Brazilian forwarder, told JOC.com.
Hapag-Lloyd, Cosco Shipping, OOCL, and Evergreen call at the Meidong terminal, while Maersk, MSC, CMA CGM, Ocean Network Express, HMM, SITC, PIL, and Yang Ming call at the Beilun or Daxie terminals in the Ningbo-Zhoushan port complex that have not been impacted.
“With this sudden suspension, we expect a delay in planned sailings that might affect your cargo planning,” a spokesman for Hapag-Lloyd told customers in an advisory issued Wednesday.
The spokesman said Hapag-Lloyd has three services that call at Meidong — AN1, AN2, JCS — and that the terminal has suspended all container services, meaning vehicles and personnel are no longer permitted entry.
Disrupting an ‘already overstrained’ supply chain
Several carriers including Maersk have told JOC.com that their warehouses in the port’s free trade zone have been forced to close with the suspension of terminal operations.
The main trade focus of Meidong terminal is the Asia-Europe and trans-Pacific trades, but all terminals in eastern China are congested, with Kuehne + Nagel advising customers that average waiting time for a berth is currently two to three days.
Container terminals in eastern China — already working at full stretch with no slowdown in demand from the US and Europe — were further disrupted by typhoon In-fa, which swept through the region two weeks ago, suspending port operations and leading to vessel and container bottlenecks. The closing of the Meidong terminal piles further delays on the already congested ocean logistics chain.
Alphaliner noted in its latest weekly newsletter that the container shipping market has been operating at 100 percent utilization levels throughout much of the year. This has left supply chains “massively overstrained” and even minor operational problems could quickly spiral out of control and have massive knock-on effects, the analyst said.
According to Alphaliner, the Yangtze River estuary and Hangzhou Bay ports of Shanghai and Ningbo-Zhoushan have seen the worst congestion, but the Pearl River Delta port of Yantian also has numerous ships waiting for a berthing slot.
“Almost worse than the current delays in Chinese ports are the overarching fears of another major lockdown in China, which would cause utter chaos in the already overstrained supply chains,” Alphaliner warned.
Josh Brazil, vice president of marketing at ocean freight visibility provider project44, shares those concerns. “The fact that ships remain delayed and now COVID-19 variant outbreaks in major Chinese manufacturing hubs are on the rise indicates there may be far-reaching down-stream consequences going into Black Friday and holiday shopping seasons,” Brazil said in a statement.
Shipping and research consultancy Drewry warned earlier this month that port congestion, logjams, and higher freight rates would be a recurring theme until the first half of next year if outbreaks of new infections dilute the workforce of terminals in key locations across the globe.
Forwarders and carriers are closely watching developments at the Ningbo-Zhoushan port complex, keenly aware of the almost complete shutdown of YICT, one of the busiest terminals in the world, after a May 27 COVID-19 outbreak. Scores of vessels omitted the port of Shenzhen and a huge bottleneck of containers quickly stacked up during four weeks of severe congestion. Full operations at YICT only resumed June 23.