A Covid-19 outbreak at a major Chinese port is worsening the global shipping crisis
- Global shipping disruptions could trigger delays in goods in this year's holiday season, industry experts say.
- A Covid-19 outbreak at a major Chinese port has led to a backlog of shipments, worsening an existing shipping crisis.
- "Heaven knows what's going to happen come August or September," one expert told the BBC. "It could get crazy."
- See more stories on Business Insider SA's home page.
Shipping disruptions around the world could lead to a shortage of goods for the holiday season, according to industry experts.
A recent coronavirus outbreak in the province of Guangdong, South China, prompted authorities to introduce strict Covid-19 measures, causing congestion at four major ports, Reuters reported on Friday.
This is worsening the existing worldwide shipping crisis that has hiked costs and led to a shortage of popular goods, from chicken and semiconductors, as reported by Insider's Rachel Premack.
"Supply chains are more complex and delicate than ever," Tom Fairbairn, engineer at middleware company Solace, told Insider. He recommended that customers use real-time data, for example from Unilever's database, to see whether there will be disruptions or not.
"Retailers using this approach can say with confidence whether their Christmas inventory will be delayed or not," he said. Otherwise, he said retailers could be "wasting existing stock, incurring unnecessary late fees, missing opportunities, and delaying deliveries."
The new Chinese port restrictions, which include disinfection checks and limits on the vessel numbers, have triggered a backlog in shipments in ports including Yantian, Shekou, Chiwan, and Nansha.
Yantian, "one of the biggest ports in China, has basically closed down for close to three weeks," Nils Haupt, communications director at the German shipping firm Hapag-Lloyd, told the BBC on Sunday. "They have some berths in operation, but nowhere near enough."
Delays are "piling up" in the other three ports as well, Haupt said.
James Baker, container shipping editor at shipping industry publication, Lloyd's List, told the BBC that retailers are already putting in orders for the holiday season because they know how slow shipping is at the moment. He said this is leading to more congestion.
"Traditionally, the peak season for container shipping starts in the third quarter as everyone stocks up for the holiday season in the west, but this year we're just in a permanent peak season already, and heaven knows what's going to happen come August or September," he said. "It could get crazy."
Baker told the BBC he expects shipping delays to last for at least another year.
More than 50 container ships were waiting to dock in the Outer Pearl River Delta as of Friday, compared to 20 ships in the same period last year, according to Refinitiv data cited by Reuters. This was also more than in February 2020, when coronavirus stopped China's shipping business, according to the data.
The industry is still suffering from the 400-ship traffic caused by the Ever Given container ship getting lodged in the Suez Canal in March. The ship was freed at the start of April, but Maersk, the world's largest shipping company, said it could take months to resolve delays.
"We were just beginning to see light at the end of the tunnel" after the Suez Canal blockage, said Haupt. "But then unfortunately we ran into this situation in Yantian."
The Covid-19 crisis has sparked issues for the shipping business - customers' spending habits fluctuated during the pandemic as people stayed at home, shifting the demand for shipments and destabilising the industry.