Yantian International Container Terminal (YICT) in Shenzhen, one of China’s busiest container ports, has imposed strict disinfection and quarantine measures due to COVID-19. Following restricted port operations. Port congestion, delayed processing, and massive delays in sea freight are the result. Consequently, a large number of shipping companies do not serve the port now, but in some cases try to load containers via surrounding ports.
The background
Yantian was temporarily closed at the end of May due to another COVID-19 occurrence among some port employees. The container yard for export cargo was temporarily closed. The immediate consequence? A massive backlog of containers right up to the port’s gates.
Even after the reopening of the port on May 31, operations are faltering. As a result, more than 40 container ships were temporarily anchored off Yantian. With a daily volume of almost 25,000 TEU that the port could not handle, it is hardly surprising that the outcomes result in considerable challenges for logistics. The partial closure of the Yantian port, one of the busiest ports in the world, with about 100 ship calls per week, once again aggravates the already tense situation in the Asia-Europe sea freight traffic.
What consequences does the closure of Yantian imply for global trade?
Major shipping companies have already announced that they will skip several ship calls at Yantian on their scheduled routes or cancel ship departures. In doing so 2M Alliance (Maersk and MSC) announced that 40 vessels will omit calls, as well as 16 calls of THE Alliance, referring also to 11 vessels from CMA CGM. The backlog of containers remains high, not least because work in Yantian is currently still being carried out at a productivity level of 40 – 45 %. Thus it is likely that the pressure on the supply chains from southern China will further increase because partly numerous containers are currently unavailable:
- Equipment: the blocked containers are driving a further decline in availability, which is also impacting the export of goods.
- Alternative ports of loading: Many carriers have switched to the surrounded ports Nansha and Shekou in particular, which now also have to contend with widespread delays as a result of a capacity overload.
- Truck congestion: Due to the quarantine measures imposed by the government, the availability of truck drivers is also decreasing, which has now led to widespread road congestion in front of the southern Chinese ports.
- Higher freight rates: Due to the ongoing shortage of containers, but also because of potential “congestion surcharges” made by shipping companies, it is very likely that higher freight rates will continue to be higher in the future.
- Longer transport time: Further delays are also to be expected in the transport time from China to Europe due to traffic-related delays in collecting and delivering containers.
Based on the massive after-effects of the backlog in China, current forecasts assume that the congestion, and thus the situation in Yantian as a whole, will continue for another three to four weeks. The negative impact on global supply chains is already considered more serious compared to the outcomes caused by the blockage of the Suez Canal. Even if the ships can be gradually handled, truck capacities are currently in short supply. The picture on the roads is at the moment characterized by massive traffic jams of trucks loaded with exports.
Measures we at Forto take for you
While the situation may seem intransparent at first glance, there are some ways to deal with the current challenges in sea freight. At Forto, we are glad to help to take the action needed in your situation:
- On our digital platform, you are able to see in real-time where your goods are. Therefore you are always informed about the status of your shipments.
- We will be pleased to help you adapt the planning of your shipments to the current situation in a manner that is well structured. Of course, we will inform our customers about their options immediately.
- In addition, we recommend in this situation also to focus on long-term planning and to place bookings for the coming week but also for the weeks following as soon as possible, to ensure shipments in time.
- In the case of time-critical shipments, we offer several options to transport goods by air freight. We will be happy to present alternatives – even at short notice. Feel always free to reach out to your customer advisor to get more information about air freight. No matter if you want to ship single pallets or whole containers.
With Forto, you have a strong partner at your side who will take care of your shipments not only in challenging situations. Whether one of your shipments is affected by a traffic jam, ship failure, or similar, we will keep you up to date and discuss with you all available alternatives. If you have any questions, please do not hesitate to contact us via e-mail.
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