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South China port disruptions could extend to Christmas

     Container Terminal

A COVID outbreak at the Port of Yantian, China in June resulted in restricted operations, which caused massive congestion at the port.  This port restriction also affected the neighbouring ports of Shekou, Nansha and Hong Kong.  Despite the port of Yantian now operating at full capacity again, the backlog of freight has severely impacted the manufacturing sector.  Many factories were forced to pause production, as they could not ship their goods, resulting in lack of space in their warehouses.  This will cause further supply chain delays that will be felt for many months.

Blank sailings are also on the rise in July, with a total of 17 to the Pacific South West; seven of which will occur in the last week of July, meaning backlogs and congestion will spill into August.  Shanghai and Yantian are also starting to experience even more congestion as peak season volume ramps up; both ports are currently experiencing a 5-6 day delay on average.

The availability of equipment is now at critical levels in South China.  There are shortages of 40’/40’HQ and 45’ containers, with carriers pushing shippers to utilize 20’ containers to keep goods flowing.  The ports of Los Angeles and Long Beach are still heavily congested, and the terminal operators are expecting a spike in imports from the vast backlog of US-bound cargo that had built up at Yantian port during the COVID outbreak.  There are currently approximately 10-15 vessels anchored off port waiting to berth.

Other ports, such as Oakland, which had picked up some of Yantian’s volume during the outbreak are also clearing their backlogs.  These delays at US ports slow the return of empty containers back to Asia, and further compound equipment shortages.  The demand for containers is still well outpacing supply, and carriers are taking full advantage by increasing their rates and being creative with new surcharges.  The surcharges, which are being implemented by carriers in August, can be in excess of $5,000 USD.  The trickle-down effect results in disruptions that will most likely not subside until after the Lunar New Year in 2022.

For more information, contact Debbie McGuire, Manager – Freight Solutions.

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