The shutdown of the Meidong terminal at China's Ningbo port has given shippers flashbacks of recent congestion at the country's Yantian port, leading to fears of severe ramifications in an already disrupted container market.
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While the situation was still developing, the closure will likely have a big impact, a trader based in China said. "The forwarder told me all shipments will be delayed."
If the Ningbo issue escalates, there will be complete chaos, a logistics provider based in Hong Kong said, given that this is a crucial time for shippers looking to move goods to the US ahead of Christmas. "[Previously], the cargo reached the US East Coast in about 20-25 days but now it takes 50-75 days. If you miss this window, you will miss the pre-Christmas season sale."
Operations at Meidong were suspended on Aug. 11 after a COVID-19 case was confirmed amid port workers. since then, major carriers have already started omitting the terminal, offering Shanghai as an alternative origin and warning of upcoming congestion and delays.
However, some stakeholders said it was too early to gage the actual impact of the shutdown and a lot will depend on the number of cases.
"If it is only one case, the terminal will probably be up and running soon again," Fredrik Barner, General Manager at Mid-America Overseas, said. "If this is not a single case, we are definitely in trouble. So hopefully we will know more by this weekend."
"I have loading on Sunday. As of now it is confirmed, but let us wait," a petrochemical trade based in India said.
The impact of the Ningbo shutdown may be compounded by ongoing pandemic-related lockdowns in Vietnam, which have left operations at major ports at a halt for nearly a month.
According to sources, the lockdown may be extended until the end of August, leading to curtailed production and exports in the country.
"COVID cases are still rampant in South Vietnam and Central Vietnam. Production plants are closed and only 30%-40% of factories are still working in South Vietnam," the logistics provider based in Hong Kong said.
With vessels omitting Vietnam, carriers are giving more space out of Yantian but the real problem will start when the lockdown is lifted and there will be a huge backlog at Vietnamese ports, the logistics provider said.
The turmoil at key export hubs in Asia has added to worries for importing countries.
"Last year, the whole world ended up shutting down fairly close to one another. This time around, certain countries like the US or the UK are not shutting down. People are still buying things and going out," Eric Sisson, International Sales Director at US-based Steam Logistics said.
"Now, if you have got importing countries not closing down and needing commodities but then if their suppliers are shutting down, what does that situation look like?" Sisson said.
While some sources blamed the pandemic for the recurring issues and saw the situation in the container market deteriorating in coming months, others said was it was being overhyped.
"I believe it is just the second of many such shutdowns that China will effect over the next months, as the world learns to live with the virus, further affecting space and container availability in addition to schedule disruptions," an ocean carrier source said. "I do not think it will be as bad Yantian ... perhaps shippers/liners have also learned some lessons from Yantian side effects."
At the moment, it was only 25% of Ningbo port's capacity that was missing, according to Nick Coverdale, founder of Agreefreight. "Yantian, was it really that bad? Seems there are some (as it is in their best interest) [keen] to express 'Logistical anarchy' whenever there is a hiccup."