With the world’s third busiest port suddenly shutting down due to nCoV infection, will the nightmare repeat along the global supply chain?

With the world's third busiest port suddenly shutting down due to nCoV infection, will the nightmare repeat along the global supply chain?

According to a notice from Ningbo-Zhushan port, all container services to and from Meishan station of this port were suspended until further notice on August 11. The Ningbo city government said a port employee has tested positive for nCoV. At present, all close contacts of this person have been localized and isolated.

According to calculations by consulting firm Gardenaworld, the closed terminal handles about 25% of cargo through the port. Meanwhile, the German carrier Hapag-Lloyd said ships leaving the port would be delayed.

This is the second time a Chinese port has had to be closed due to a case of nCoV infection. Previously, the Yantian port in Shenzhen had to be closed for about a month at the end of May. Due to this situation goods get stored in factories and godowns. Besides, freight rates are also likely to skyrocket, which is already at record highs and is causing inflation.

The Baltic Dry Index, which tracks charter fees for shipping raw materials such as iron ore, coal, cement, grain, and more, has risen more than 10% from a month ago amid the introduction of the Delta version. Spread. While US ports have yet to have a significant impact, problems in China could hurt companies that depend on container exports to the country.

Container freight rates from Shanghai to major cities have skyrocketed this year.

Many fear the disruption will continue to put pressure on shipping and supply, slowing growth and raising prices for a wide range of commodities. Prolonged closure of the port of Ningbo could cause significant problems for the world economy, as maritime trade is usually busy at the end of the year when companies ship products for holidays.

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Project44 Marketing Director Josh Brazil said: “Possibly, there will be far-reaching consequences for the product reaching customers on Black Friday and the start of the holiday shopping season. Time in the next 24 hours will determine how big this boom will be. Change in 2021 Often it happens overnight.”

In addition, containers passing through other terminals in the Ningbo-Zhushan port may also be forced to slow down. According to logistics and shipping company CMA CGM, the port currently only accepts container ships within two days of the expected arrival date.

With the world's third busiest port suddenly shutting down due to nCoV infection, will the nightmare repeat along the global supply chain?  - photo 2.

Production of containers at China ports (unit: TEU).

A spokesman said the Port of Los Angeles, which has seen a sharp drop in cargo volumes due to the Covid-19 outbreak at Yantin Port, is preparing to look into a similar situation. Meanwhile, Anton Posner, CEO of supply chain management company Mercury Resources, said many charterers have included a covid clause in their insurance policies so that they do not have to pay for the affected vessels.

The closure of the Ningbo-Zhushan port is raising concerns that ports around the world will soon face a similar risk of disease outbreaks. Meanwhile, coronavirus restrictions slowed the flow of everything from perishable food to electronics last year.

Currently, COVID-19 is at risk of spreading through the world’s docks and shipping systems. The sector is already struggling to meet unprecedented demand, as the economy reopens and manufacturing activity picks up.

refer to bloomberg

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