Disruption could be on its way to the container distribution system this summer in the form of Shanghai cargo chaos due to unshipped containers.
There is an estimated 260,000 TEU (Twenty-foot Equivalent Unit) of unshipped cargo in Shanghai, and it will likely swamp the market if China’s Covid-19 restrictions are lifted.
According to data reported by independent maritime research consultancy Drewry, the Covid-19 lockdowns in China have created a cargo overload problem for the already stressed and overloaded global container distribution system. The current issue has primarily been caused by a reduction in vessel calls since mid-April.
An analyst from Drewry explained: “Drewry estimates that up to 260,000 TEU of export cargo was not shipped from Shanghai in April, because of the lockdown. This is the equivalent of 26 fully loaded 10,000 TEU containerships that will have to be found somehow in future months as supply chains are reactivated.”
The analyst also described how the greatest uncertainty right now is when exactly China’s lockdown restrictions will end. The end of restrictions have the potential to create a ‘bullwhip impact’ across the supply chain.
“Liner shipping schedules will also take at least one rotation to normalise,” continued the analyst. “This would mean that, even if lockdowns were to end today, the predictability and capacity of the container distribution system would be jeopardised during summer peak season.”
Container xChange conducted their own research into the matter, with a survey of forwarders, traders and shippers. They discovered that over half of respondents were predicting a cargo surge during this year’s summer peak season that will be even more chaotic for global supply chains than last year.
One of the founders and CEO of Container xChange, Christian Roeloffs, said: “One big question is whether China is going to sacrifice its zero-Covid policy to get trade and its economy moving again. If it does, then there’s every sign that we’ll see a substantial surge as backlogs of exports are shipped.” However, Roeloffs also noted that there were currently few indications that China’s President Xi was contemplating boosting trade by removing the zero-Covid restrictions.
Roeloffs also explained that if Chinese lockdown rules were to be relaxed soon allowing truckers to get back to work, then the backlogs will arrive at the same time as peak season orders. This has the potential to cause a lot of supply chain blockages at already congested ports around Europe and the United States.
If you have any questions or require further information regarding Shanghai cargo chaos, please contact your local Account Manager on +44 0113 271 1555, or info@carrycargo.com.
