Date: 21.07.2022

China Update; Testing prompts Shanghai lockdown scare

With individual district lockdowns and mass testing again underway, the trade press have been reporting that Shanghai could go back into lockdown, which would be a major disruption as we enter the traditional peak season.

It’s been just six weeks since Shanghai emerged from its two-month zero-COVID lockdown and several districts have been subjected to lockdowns and mass testing again.

Officials said the measures were needed to avert another citywide lockdown, but the press highlighted that mass testing has generally been the precursor to further lockdown restrictions in China.

Our colleagues in Shanghai confirm that localised short-term lockdowns and testing did take place in a number of districts, but they are not experiencing any issues moving sea or air cargo.

And even with more widespread testing this week, in nine of 16 districts, they think that a total lockdown is unlikely. They anticipate more focused lockdowns, that concentrate on specific districts, which would be far less disruptive to supply chains.

The lockdown threat is not limited to Shanghai, with 30m people currently under some form of COVID restrictions, with hot spots in Henan province and Guangzhou, which is also carrying out mass testing again.

The latest Covid scare comes at a time when China’s ports and supply chains are already under pressure and raises fears that local lockdowns will result in further congestion in already strained ports.

Container ships visiting China have already been affected by recent typhoons, impacting operations in Ningbo, Shenzhen and Hong Kong, with fewer vessels berthing.

The average waiting time for vessels to berth at Shanghai last week was up from 12 to 24 hours and most terminals experienced severe congestion at Ningbo, due to the bad weather.

COVID testing requirements haven seen longer berthing times at Yantian and Qingdao had been impacted by fog and bad weather, with average waiting times increasing 48 to 96 hours.

Peak season, expected from late July and August, could see worsening congestion leading to potential delayed or blank sailings, if the situation deteriorates, which will continue to put pressure on capacity and rates.

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

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 solutions, however the situation in Shanghai develops.
Our cloud-based supply chain management platform, MVT, makes every milestone and participant in the supply chain transparent and controllable, down to individual SKU level, which means you can adapt and flex your supply chain, as the local situation changes. 

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