China has imposed a 14-day lockdown at Zhenhai, one of the six districts in Ningbo, amid an increase in coronavirus infections, prompting concerns of port disruptions and worsening supply chain blockages, according to a recent report by S&P Global.
"Just received an update from our China contacts...Zhenhai district has been locked down due to three positive cases of COVID-19. The lockdown is for 14 days," the information and analystics firm said, citing a source.
It said an importer based in the US confirmed the same information, adding that the company's Shanghai office has been closed.
"We need to now ascertain the impact on port and terminal operations and how much trucking and depot operations will be affected," a source based in Singapore said. However, this also means other regions could also soon see similar restrictions, the source said.
"The rising COVID infections may lead to shutdowns at Ningbo and some other ports in China, adding to congestion and cargo backlogs," a source with a UK-based logistics company said. "this is only the beginning -- the first quarter of 2022 is going to be a complete wreck."
Continued disruption in ocean freight
S&P noted that the increase in coronavirus infections may further disrupt the ocean freight industry by triggering higher demand for PPE kits and masks, in turn leading to higher freight rates.
A separate report noted that more than 300,000 people have been tested for Covid-19 in a district in the port city of Ningbo, following an outbreak of the illness, detected on Monday.
"The traditional agricultural trade season also starts in January and a simultaneous rise in PPE shipments could choke the system further," an exporter based in India said separately.
Nonetheless, the S&P report noted that "some sources" said that so far they have not faced any challenges related to the shutdown.
Ningbo – home to the world’s largest port – was partially closed last summert after another Covid-19 outbreak.
"No effect currently ... I don't think the port will be impacted, but it will also depend on the development on the coronavirus situation" said Dave Li, branch manager, Chongqing City, T.H.I Group Limited.
Container rates on major trade lanes have risen nearly three- to four-fold in the last 18 months amid coronavirus restrictions and subsequent supply chain blockages, as well as equipment shortages.
S&P said increased demand, with expenditure shifting from services to products, has further supported prices.
Platts Container Rate 5 -- North Asia-to-East Coast North America -- was assessed at US$10,000/FEU on Dec. 6, against US$4,800/FEU a year ago.
The Platts container assessments denote the FAK (Freight All Kind) spot rates.
Meanwhile, it added that the all-inclusive premium rates are currently at US$16,000-US$18,000/FEU on North Asia-to-East Coast North America route and US$17,000-US$19,000/FEU for Southeast Asia-to-East Coast North America.
China currently implements a strict zero-Covid policy to curb local outbreaks with mass testing, and lockdowns put in place aside from extensive quarantines.
