Concerns about port congestion increased when Shanghai began to be blockade

Congestion at the Port of Shanghai - which is the world's largest container port - is expected to increase as Shanghai will be locked down to carry out widespread Covid-19 testing.

Port of Shanghai, China (Photo: Imgur)

The blockade in Shanghai began at 5 a.m. local time yesterday (March 28), with areas east of the Huangpu River beginning a four-day blockade. After that, areas west of the Huangpu River will be locked down for four days. During the blockade, people will be banned from leaving their homes and public transport will be suspended.

While the Port of Shanghai confirmed that the port will remain open throughout the blockade, Linerlytica analyst Tan Hua Joo told Container News that the blockade will further increase port congestion.

“Exports will be curtailed as factory production is affected while ports remain open. However, based on what was observed during the lockdown at Shenzhen, port operations were affected by manpower shortages so an increase in port congestion is expected,” said Tan.

Linerlytica data shows worsening port congestion, which was impacted by more than 14% of total container vessel capacity for the first time last week, which is expected to increase further due to the blockade in Shanghai.

American electric vehicle maker Tesla is said to have stopped production at its Shanghai factory during the shutdown, according to Bloomberg.

Taiwan's United Daily News reported that Taiwanese electronics factory owners in Kunshan in China's Jiangsu province are panicking because the blockade will prevent them from moving goods to Shanghai for export. Complicating matters more is China's two-day Tomb Sweeping Day holiday on April 4-5, which coincides with the regulatory end of the blockade in Shanghai.

China, adopting a zero-Covid-19 policy, is battling a resurgence after an outbreak first emerged in Wuhan at the end of 2019, which led to a blockade in Shenzhen (since upon dismantling) and Jilin province. As of March 27, at least 6,000 infections have been reported nationwide.

In a notice to customers, UK freight forwarder Embrace Global Logistics said there could be disruptions to factory production and delays in shipping to and from Shanghai.

The announcement stated, "The decision (to lock down) came as a surprise as city officials until very recently assured that no such action was planned. Factories and companies would be allowed to operate either under the 'closed loop' system or on a work-from-home basis. That means factories are sealed off with only limited staff working and living inside the areas."

The company said its employees living in the affected areas will work from home, and all operations and administrative activities will continue as normal but in strict accordance with the new guidelines.

Embrace added that the port of Ningbo, although located near Shanghai, was not affected at all.

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