Supply chain analysis

Disruptions are hitting the market, reducing capacity, as factories reopen whilst others go into shutdown. The lockdowns slow both production and cargo movement, creating a double hit to the supply chain.

During February, average container prices declined by 12 – 18% at the ports of Shenzhen, Qingdao and Ningbo amongst others, but prices are predicted to rise again once the Chinese ports fully resume operations.

“If persisted, the lockdowns will delay container movement significantly at these ports which will have the maximum impact on the US shipments,” said Dr Johannes Schlingmeier, cofounder and chief executive, Container xChange

“Looking in the long term, this will add create more chaos as rates climb higher, capacity tightens and shipments delay. The shippers will need to plan their cargo much more in advance in 2022 than the last year, given the geopolitical scenario, the upcoming US West Coast contract negotiations in July and the rail route disruptions,” he added.

A further complication is contract negotiations between the longshoreman’s union and West Coast shipping ports which are set to expire on 1 July 2022. Delayed shipments from China might well begin arriving at this time, only to face increased congestion at ports on both the West and East Coasts.