The Covid-19 pandemic brought the entire world to a standstill. Ever since the end of 2019, when the new coronavirus emerged in many countries all over the world, little did anyone know its implications. One of the latest challenges that have risen due to this virus outbreak is the port congestion at Yantian Port in China.
The global shipping industry and supply chain are facing a major disruption as the Yantian port and neighboring Shekou ports in southern China near Hong Kong are facing restrictions due to an increase in the Covid-19 cases.
What caused the Yantian Port congestion in China?
The covid-19 pandemic had impacted the shipping industry as the restrictions imposed caused the flow of cargo to be stopped completely and thus affected import-export companies severely. The Yantian Port, being of the busiest ports in the world and China, handles more than 13 million TEUs of cargo annually, and if there is any stoppage, it will impact the entire supply chain in China and the world.
This port congestion started around 27th May, when the first coronavirus case was reported and started increasing rapidly. The cases were spreading among the workers and thus the officials had to impose strict constraints which led to the port congestion that we are all worrying about today.
The Chinese port authorities straight away implemented health and safety measures including stringent restrictions and disinfection procedures in order to curb this unprecedented mishap. As a result, the port became under-staffed and the daily activities could not be fulfilled according to deadlines. This has impacted the overall operation efficiency at the Yantian Port.
How has this port congestion impacted the supply chain on a global scale?
There are major delays in processing the cargo shipments, which has left no other choice but for the container shipping companies to roll out press releases and notifications informing their clients about the disruptions in the flow of shipping containers around the port.
This current issue has been said to be even worse than the Suez Canal blockage of March 2021 as many shipping vessels are being held up at the container terminal and not allowed to enter, causing a huge traffic jam and a huge backlog of cargo that needs to be processed.
As of now, only a small percentage of the port is fully operational, which is not enough to meet the requirements of transportation of the cargo. Estimates are being made that there are over 20,000 TUEs backlogged in the Yantian Port, which has led to a severe port congestion in the South China Sea. Reports have suggested that this situation will aggravate over the next few weeks, which is a cause of concern for the entire world economy.
- The backlog of shipping containers still remains very high as the port is not operating at a full capacity.
- The cargo containers that are blocked and stuck at the Chinese terminal are creating a drop in the availability of containers, and thus impacting the flow of shipments.
- Since there are many quarantine measures imposed by the government to control the cases and to ensure that there are not spreading, it has also caused road congestion due to the decrease in truck drivers to transport the shipping containers.
- As there is an acute shortage of cargo boxes, the demand has gone up, subsequently increasing the prices of freight rates all over the world.
The delays are expected to be the same for many days, which means that the transport time from China to any place in the world where cargo needs to be delivered will be delayed for a long time.
There are many forecasts that are being prepared which inform that the congestion at the Yantian Port will be continuing for another three to four weeks. This negative impact on the global supply chain is worrisome for all major authorities in the world trade.
Looking at the current situation, Maersk shipping line provided a latest update to their customers: “The situation continues to deteriorate as more positive COVID cases have been confirmed in Shenzhen where Yantian port and Shekou port are located. We continue to closely monitor the situation and are doing our best to mitigate the impact on your supply chain where possible.”
As the situation continues to worsen, all the major shipping lines are re-routing their cargo shipments to other nearby ports of the Yantian port where the delays will not be as long as the latter.
The global transportation system will be operating at a maxed out capacity, thanks to Covid-19 outbreaks in many ports all over the world which are causing drastic traffic congestions and further delaying the shipments from reaching their destination.
Reports have suggested that the Port will start operating with complete workforce from the end of June, but this still implies that the time taken to process all the major backlogs and for the supply chain to start working in a normal way could take months to be achieved. All we can do now is be hopeful for a successful recovery and clearance of backlogs so that the cargo containers can be transported effectively and efficiently.