Congestion at South China ports worsens on anti-COVID-19 measures

Stock Markets1 hour ago (Jun 11, 2021 05:40AM ET)

(C) Reuters. FILE PHOTO: A cargo ship carrying containers is seen near the Yantian port in Shenzhen, following the novel coronavirus disease (COVID-19) outbreak, Guangdong province, China May 17, 2020. REUTERS/Martin Pollard/File Photo/File Photo

By Muyu Xu and Gabriel Crossley

BEIJING (Reuters) – Congestion at container shipping ports in southern China is worsening as authorities step up disinfection measures amid a flare-up in COVID-19 cases, causing the biggest backlog since at least 2019.

More than 150 coronavirus cases have been reported in Guangdong province, a key manufacturing and exporting hub in southern China, since the latest wave of cases struck in late May, triggering local governments to step up prevention and control efforts that have curbed port processing capacity.

Ports in Guangdong, including Yantian https://mp.weixin.qq.com/s/pNvd8FG-_kBPa1jz4HBj_w, Shekou, Chiwan and Nansha, have issued notices this week suspending vessels from entering ports without advance reservations and will only accept bookings for export-bound containers within three to seven days prior to the arrival of vessels.

Major shipping companies have warned clients of vessel delays, changes to port call schedules, and the possibility of skipping some ports altogether.

Ocean Network Express (ONE) said in a notice on Wednesday that Yantian International Container Terminal continues to operate below capacity because of COVID-related work restrictions while congestion at container terminals at Shekou and Chiwan has surged to over 90% of capacity.

The world’s leading container line Maersk on Thursday increased the duration of expected delays at Yantian to 16 days from 14 days previously.

As of Friday, more than 50 container vessels are waiting to dock in the Outer Pearl River Delta, where the ports are located, according to Refinitiv data.

That compares to around 20 vessels in the same period last year and more than in February 2020 when ports were paralysed because of China’s initial COVID-19 outbreak.

Exporters said the impact has been limited so far, as loading delays and slow deliveries have hampered logistics chains since the start of the COVID-19 pandemic.

“Basically we had a similar experience last year so we have experience in responding, only the increase in transport costs are getting really astonishing. The freight fees are reflected in the increase in material costs which are up by around 15%-30% already,” said a sales manager at an electronics cable manufacturer in Shenzhen, a large manufacturing city in Guangdong near Hong Kong.

The sales manager’s company had to pay extra fees to deliver products to ports near Shanghai to meet a client deadline.

Container freight rates from China to Europe [FREIGHTOS-CN-EU] rose to a record of $11,037 per 40-foot container this week, caused by supply chain bottlenecks from a surge in consumer goods demand and some knock-on effects from when a container ship blocked the Suez Canal in March.

Congestion at South China ports worsens on anti-COVID-19 measures

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