Viewpoint: ‘Shanghai Surprise’ – and a new lockdown to fear
Just like the Sean Penn-Madonna flop, the latest “Shanghai Surprise” is also a bomb.
China’s latest move announcing a gradual exit from lockdowns for the eastern part of Shanghai has logistics managers warning customers of the impact this will have on truck deliveries of their products both to the airport and at the seaport.
As the military steps in to test millions of civilians, the Chinese government is showing the world that ‘zero COVID’ is a policy it is do not giving up soon.
In the wake of the massive test measures shutting down Shanghai, a city just to the south (Zhejian Haining) temporarily shut down, launching a Level 1 emergency response, according to Haining Release’s WeChat public account. Strict three-zone management and control of tightness, control and prevention are in progress; meanwhile, schools and businesses will be closed, and intercity trains, buses, taxis and long-distance passenger cars will be suspended.
Steve Lamar, CEO of the American and Apparel and Footwear Association, told American Shipper that this region is a hub for apparel and apparel manufacturing.
A spokesperson for Orient Star Logistics explained that “COVID testing measures and restrictions are reducing truck supply. Yet the biggest problem we face is the restrictions on truckers traveling to provinces. surrounding areas for picking up goods.The local government checks the driver’s route from previous weeks and would reject entry if the driver visits an alerted area.
Logistics black hole
This lack of clarity creates a black hole in logistics planning.
In a recent note to customers, Worldwide Logistics wrote that the situation is “still evolving” with no announced reopening timeline.
“The extent to which the production and shipping plan will be affected depends on how long it will take to bring this outbreak under control,” the note explains. “And obviously, we expect the volume of Chinese exports to fall by around 30% in the coming weeks, which will put downward pressure on the market spot rate. space has been freed up by carriers to fill the ship for the time being.
Pudong New Area, Fengxian, Jinshan and Chongming districts as well as parts of Minhang and Songjiang districts are included in this new phase of the plan.
Crane Worldwide Logistics has alerted customers to the reluctance of cities to allow drayage trucks from Shanghai. The company described the container drayage situation as “difficult” and airfreight as “almost impossible” due to lack of manpower.
Crane wrote that “there are not enough stevedores in the port so the efficiency of loading and unloading has been affected. Waigaoqiao Port and Yangshan Port are congested.
“For import: The waiting time for import vessels to dock will be longer.
“For export: some shipping carriers announced ship delays or failed to call Shanghai certain ships/voyages, and some announced blank crossings. Many customers moved to Ningbo port. Some carriers have started allocating more space in Ningbo, but some have not acted so quickly.
Ahead of capacity
Keith Winters, CEO of Crane Worldwide Logistics, told American Shipper that given the fluidity of the situation, agility and flexibility are needed.
“Different provinces may have restrictions on the movement of goods, which is why our teams communicate daily what is accessible while following established government guidelines with current lockdown protocols,” Winters said. “Crane Worldwide has operations across China and our best advice is to continue to communicate and stay ahead of your capacity needs as this situation develops.”
Akhil Nair, vice president of global carrier management and ocean strategy at Seko Logistics, also echoed the same challenges.
“Seventy percent of Shanghai’s container business comes from other regions, so drivers have to enter different regions, which means tests that are less than 48 hours old are needed,” Nair said. “With the confinement, offices and warehouses are closed.
“Our CFS (Container Freight Station) is closed from March 30 to April 5. It is a place where exporters deposit their products so that they can be added to a container. These are small components that wouldn’t normally have their own container. With CTS closures, these exports cannot be dropped off or the containers filled. »
The impact of these locks and restrictions can be tracked by the amount of capacity pending outside the port boundaries. MarineTraffic data revealed American Shipper’s capability.
The disruption of these restrictions can be seen in the dips. Shanghai’s out-of-port holding capacity is the only port on an uptrend.
It is important to remember that logistics companies need to provide a realistic picture of the environment so that their customers can plan. It doesn’t fill their coffers with cash if they overuse a situation or undersell.
This line from Worldwide Logistics says it all: “There is a clear signal that the whole city could be shut down if the situation does not improve.”
So grab some extra popcorn – this horror flick may be the first of a double feature.
More Lori Ann LaRocco
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