Congestion at South China ports worsens on Covid-19 curbs

The congestion is causing the biggest backlog since at least 2019. PHOTO: REUTERS

BEIJING (REUTERS) - Congestion at container shipping ports in southern China is worsening as the authorities step up disinfection measures amid a flare-up in Covid-19 cases, causing the biggest backlog since at least 2019.

More than 150 cases have been reported in Guangdong province, a key manufacturing and exporting hub in southern China, since the latest Covid-19 wave struck in late May, triggering local governments to step up prevention and control efforts that have curbed port processing capacity.

Ports in Guangdong, including Yantian, Shekou, Chiwan and Nansha, have issued notices this week suspending vessels from entering ports without advance reservations and will accept bookings for only export-bound containers within three to seven days before the arrival of vessels.

Major shipping companies have warned clients of vessel delays, changes to port call schedules, and the possibility of skipping some ports altogether.

Ocean Network Express (ONE) said in a notice on Wednesday (June 9) that Yantian International Container Terminal continues to operate below capacity because of Covid-19-related work restrictions while congestion at container terminals at Shekou and Chiwan has surged to over 90 per cent of capacity.

The world's leading container line, Maersk, on Thursday increased the duration of expected delays at Yantian to 16 days from 14 days previously.

As at Friday, more than 50 container vessels are waiting to dock in the Outer Pearl River Delta, where the ports are located, according to Refinitiv data.

That compares with around 20 vessels in the same period last year and more than in February 2020, when ports were paralysed because of China's initial Covid-19 outbreak.

Exporters said the impact has been limited so far, as loading delays and slow deliveries have hampered logistics chains since the start of the Covid-19 pandemic.

"Basically, we had a similar experience last year, so we have experience in responding, only the increase in transport costs are getting really astonishing. The freight fees are reflected in the increase in material costs which are up by around 15 per cent to 30 per cent already," said a sales manager at an electronics cable manufacturer in Shenzhen, a large manufacturing city in Guangdong near Hong Kong.

The sales manager's company had to pay extra fees to deliver products to ports near Shanghai to meet a client deadline.

Container freight rates from China to Europe rose to a record of US$11,037 (S$14,600) per 40ft container this week, caused by supply chain bottlenecks from a surge in consumer goods demand and some knock-on effects from when a container ship blocked the Suez Canal in March.

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