Date: 19.05.2022

Shanghai to return to normal in June? Let’s hope so…

Shanghai is aiming to reopen the city and business operations, with normal life resuming from the 1st June, as all 16 city districts report acceptably reduced ‘zero-COVID’ cases.

At a press briefing on Monday, Shanghai’s Vice Mayor announced that 15 of Shanghai’s 16 districts had recorded no new COVID-19 infections for two consecutive days, with all of the city’s 16 districts achieving zero-COVID the following day. 

The news comes as the city’s case count fell under 1,000 for the first time in over a month, with the vice mayor announcing a three-phase plan for reopening, which aims to return to normal business operations by mid to late June.

Supermarkets, convenience stores and pharmacies have opened, but movement curbs will largely remain in place until 21st May, to prevent a rebound in infections, with efforts to restore normal production and life in the city from the 1st June.

The number of trains serving Shanghai and domestic flights are increasing and from the 22nd May bus and rail services will gradually resume normal operations, but passengers will need to show a negative COVID test.

At the end of April reports suggested that 20% of the global containership fleet was caught in congestion outside ports, with more than a quarter waiting to get into Shanghai, leading to fears of a cargo ‘tsunami’ when the port reopens and pent-up container flows are finally released.

Increasing numbers of factories are operating under “closed loop production“ and most warehouses are open (though operating with reduced capacity) while – critically – more trucking is available, which means more cargo is able to be shipped from Shanghai.

While other cities implement varied COVID control policies, cargo collection and deliveries is still facing challenges and heavy cost, so please check with us on a case by case basis, for the best solutions.

Flights serving Pudong (PVG) airport are resuming and are gradually increasing, but passenger flight policy has not changed, Chinese airlines are still re-routed to other airports, while foreign airlines are either ordered to suspend and cancel or reduce seating rate to 40%.  

China’s severe zero-COVID restrictions are increasingly out of step with the rest of the world, which has been lifting restrictions even as infections spread, and are sending shockwaves through global supply chains.

China’s industrial output fell 2.9% in April from a year earlier, down sharply from a 5.0% increase in March and while economic activity has been improving in May, the strength of any rebound is uncertain due to China’s uncompromising “zero Covid” policy and the scale of future Covid outbreaks and lockdowns.

Beijing has been finding new cases almost every day, in an indication of how difficult it is to tackle the transmissible Omicron variant and while the capital has not enforced a city-wide lockdown it has extended guidance to work from home in four districts, banned dine-in service at restaurants and curtailed public transport.

We are working closely with our local partners to follow the evolving situation in Shanghai and Beijing and will continue to share any important developments.

With Shanghai’s lockdown lifting we anticipate the manufacturing bounce-back happening swiftly and we recommend checking the status of your orders with your vendors, to clarify when they will be manufactured and available for despatch.

We expect demand for space and spot/ FAK rates to increase very quickly and would suggest you start talking to us now about your potential requirements, so we can put appropriate plans in place.

With the long term fixed price and capacity agreements we have in place with our partner carriers we are well positioned to continue to deliver resilient, consistent and reliable supply chain movements as China recovers.

Our cloud-based supply chain management platform, MVT, simplifies the most demanding global trading regimes, by making every milestone and participant in the supply chain transparent and controllable, down to individual SKU level. 

To discuss how our technology could support your supply chain, please contact Simon George our Technical Solutions Director or Elliot Carlile.