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The Ongoing Effects of Chaos in Yantian

Following recent disruption due to the emergence of COVID-19 cases, Hutchison Ports, which operates Yantian International Container Terminal (YICT), has announced that the terminal will resume normal operations from midnight on Thursday 24th June.

Nevertheless, it is clear the ripple effects will be felt for some time yet.

With around 400,000 TEU caught up in the crisis, vice president of Flexport Nerijus Poskus has estimated that congestion in Yantian will take at least six to eight weeks to clear. Problematically, this means the disruption will continue into the late-summer period of peak demand. Shippers are likely to increase their prices and, as a result, consumers will see an inflation increase.

Last week, Federal Reserve policy makers in the US raised their inflation forecasts in a move that was partly driven by the bottlenecks that have formed and supply failing to keep up with demand.

Port congestion

Although the situation at YICT is undoubtedly improving, as of Wednesday 16th June there was still an average waiting time of 16 days. Some carriers, therefore, are choosing to reroute their services. Maersk has already said that 11 of its 19 services will not call at Yantian this month, and a further four will continue with ad hoc omissions.

This will add to congestion and delays at nearby ports, such as Hong Kong, Chiwan, Shekou and Nansha, and the impact on southern China is likely to be:

  • Capacity issues
  • Equipment shortages
  • Escalating rates

In its monthly Horizon report, Maritime Strategies International (MSI) said that disruption to sailing schedules and cancelled port calls will result in a failure to efficiently circulate equipment, leading to “de facto blanked sailings at a time when demand is expected to increase”.

Scarce capacity

Even without the Suez Canal blockage, the effects of which continue to rumble on, and the current situation in Yantian, maxed-out capacity would still be an issue. With US and European economies reopening and other countries buying medical goods to deal with ongoing coronavirus outbreaks, exports from China and other Asian nations are at record highs.

There is no sign that China’s trade boom will let up any time soon.

Nick Marro, lead analyst for global trade at the Economist Intelligence Unit in Hong Kong, said: “There are still a number of problem spots that will pose challenges to global trade and logistics activities in the second half of 2021. The biggest risk will be recurring COVID-19 outbreaks, which we can probably see as inevitable owing to the new variants, but this will also include mismatched supply and demand for container space and existing logistical bottlenecks in major Western ports.”

SZX airport

In addition to challenges faced within the sea freight market, SZX airport reported two local COVID-19 cases last Friday 18th June.

As a result, SZX airport has started to implement strict rules for inbound goods delivery. Anyone delivering into the airport must now bring a valid nucleic acid test certificate, obtained within the previous 48 hours. The airport’s warehouse operation is also affected due to workers being quarantined, and all airport staff are required to do COVID-19 tests on a daily basis until further notice.

Airlines have begun adjusting the flight schedule, as shown below:

  • CA: All flights are cancelled
  • CK: Flights ex SZX to Europe are cancelled

Market recovery

There will likely be a resumption of global economic activity going into Q4 2021 and Q1 2022, as well as some normalisation of the challenges we are currently facing.

Rates are expected to continue to increase.

Here at Ligentia, our freight teams continue to monitor the situation closely. For further information or a chat about your current shipment requirements click here.

Sources:

  • Air Cargo World
  • The Loadstar
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