Shanghai Lockdown Not Really Over

 In Air Freight, China, container ports, container shipping, Container Shipping & Transport, ILWU, import, Import from China, importers, International Shipping, ocean freight, ocean shipping

Shippers who import from China were likely relieved to hear the months-long “Covid Zero” lockdown in Shanghai had been lifted last Wednesday. However, they shouldn’t expect the supply chain to suddenly be running smoothly nor for the Chinese government to stop abusing its citizens there.

Continued Abuse of the Chinese People

It’s hard to even call the lockdown over when hundreds of thousands of people still haven’t been allowed to leave their homes and many who were initially allowed out have been locked back down. Voice of America (VOA) reported just yesterday:

… hundreds of thousands have not yet been allowed out of their homes, while others have immediately been placed back under local lockdowns after a brief liberation that triggered shopping sprees and booze-fueled street parties.

In downtown Xuhui district on Monday, an AFP reporter witnessed about a dozen people in one fenced-off housing compound shouting angrily at hazmat-clad officials.

From behind rows of fences, crowds chanted “Serve the people!” at officials standing on the other side.

One resident, who gave the surname Li, said tempers had flared after the community was suddenly put back into lockdown on Saturday.

“I’m very indignant,” he told AFP [Agence France-Presse]. “It’s been two months and we can’t cope anymore. We’re all negative [on COVID tests], why lock us in a cage?”

Throughout the lockdowns in China, citizens there have been forcefully taken from their homes while others have been locked in them. The horror show of power and control continues despite the massive lockdown being “lifted.” The VOA article continues:

Picture by Bruno Corpet

A local media outlet said in a swiftly deleted social media post that residents of the compound were angry at the threat of being sent to state-run quarantine facilities despite being designated “low-risk.”

Li said virus-negative people were being transferred to quarantine hotels every day, sometimes in the middle of the night.

“It’s had a huge impact on everyone’s lives,” he said. “Our mood is very bleak.”

As well it should be, Mr. Li, with this just being the tip of the iceberg of the abuses the Chinese Communist Party is committing against the people it governs.

Supply Chain Will Take Time to Normalize

It will take a while for the supply chain, with Shanghai as a major link, to recover from this lockdown. There are still restrictions in place to slow the movement of goods down in Shanghai as well as the risk of further setbacks with the threat of more lockdowns always present from China’s insane COVID Zero or zero-COVID policy.

Sam Whelan reports in the Loadstar:

… forwarders have warned that ‘business as usual’ remains a long way off for China’s biggest container port hub, given the ongoing restrictions and the inevitable supply chain hangover from two months of hard lockdown.

[Thomas Gronen, head of Greater China at Fibs Logistics] explained: “It will take weeks, if not months, to come back to anything considered as normal for the industrial output volumes, and then the shipping container volumes.”

Norman Global Logistics said Shanghai would remain a “high risk area, with limitations and controls for trucks to get in and out of the city,” thereby keeping a cap on available trucking capacity, which has been the biggest logistical challenge throughout the crisis.

According to Crane Worldwide Logistics, ocean carrier schedules will gradually return to normal in June, and the forwarder added: “However with all factories re-opened, we expect volumes will also increase gradually, especially from the middle of June onward.”

That gradual buildup that Crane Worldwide Logistics predicts is in a bit of contrast to what many in the industry have been prognosticating: there’ll be a glut of built-up cargo flooding the market, which could supercharge congestion again at U.S. ports that have just started making headway in reducing that problem.

Where Crane sees a sudden increase in cargo volume is on the air freight side:

As for airfreight, Crane noted: “Export volume will build up very quickly, and the market will become very dynamic in June.”

Hit on U.S. Ports May Not Be That Big

Despite the fact that Shanghai’s supply chain is reopening just in time for international shipping’s peak season, demand and backlog may not be enough to really flood U.S. ports with cargo.

With trillions in spending and money-printing as well as Biden Administration policy on the oil and energy sectors, inflation is soaring in the U.S. This dampens demand. Adding to that is the fact many shippers have been getting ahead of the peak season because of all the supply chain issues and the threat of ILWU slowdowns on the West Coast.

There will still be a peak season surge, as well as a surge simply from Shanghai’s reopening, but it’s also not as though no cargo moved during the lockdown. Other Chinese ports picked up some of the cargo that wasn’t able to move through the Port of Shanghai during the lockdowns, which should lessen the buildup of goods in Shanghai to a point. Additionally, many factories weren’t able to operate and produce goods at all, while others were limited in “closed-loop” systems, where employees weren’t allowed to ever leave – even to go home. Manufacturing also suffered from limitations in getting the raw materials needed to manufacture goods.

The surge that is on the way hopefully won’t spiral U.S. ports back into the full congestion mess they’ve been in. Avoiding a return to that mess also depends on the contract negotiations between the ILWU and PMA not turning so nasty that the dockworkers slow down the ports and/or the employers implement any lockouts.

Click Here for Free Freight Rate Pricing

Leave a Comment

Ocean Freight PortPhoto of Joe Biden by Gage Skidmore