Despite widespread efforts to contain the recent Covid-19 outbreak, the Shanghai lockdown continued this week as thousands of new positive cases are reported each day, according to freight marketplace Freightos.
Export volumes from China have dropped significantly since the start of the lockdowns, and authorities have announced measures to reopen hundreds of factories and improve trucking availability in Shanghai in the hopes of keeping the supply chain moving until the wave passes.
In the meantime, shippers are looking to alternative ports like nearby Ningbo, though congestion is growing there and additional restrictions have been introduced in the area.
Though some carriers are omitting some Shanghai port calls, so far there has not been widespread cancellations of ocean services. With capacity still in place and available exports dwindling, ocean rates out of China have fallen moderately since the start of the lockdowns.
Asia – U.S. West Coast prices fell 2% this week and have dipped 5% since the outbreaks in March to $15,552/FEU, while rates to North Europe have fallen 14% to $11,657/FEU as inflation has also been dampening European consumer demand.
This lull in volumes and rates is expected to be followed by a surge in pent up demand and volumes – and possibly rates as well – once Shanghai reopens. And while congestion at destination ports like LA/Long Beach has improved somewhat, it is still a major problem. The ports are rushing to resolve a growing rail backlog, and expect congestion to worsen once delayed orders start arriving from Shanghai and coincide with US retailers already bringing in peak season orders early to get ahead of expected delays.
Air cargo diversions away from Shanghai are clogging up area airports. And despite a significant decrease in available exports, the cancellation of an estimated 40% of air cargo capacity out of Shanghai is helping to keep air rates elevated. Freightos Air Index China – N. Europe rates have increased 40% since the start of the lockdowns to $8.69/kg last week.
- The Shanghai lockdown continues, and though authorities are taking steps to reopen some manufacturing and restore trucking capacity, export volumes have fallen significantly.
- As ocean carriers have yet to remove capacity, ocean rates have eased somewhat since the start of the shutdowns – 5% from Asia to the US West Coast, and 14% to North Europe.
- Congestion at destination ports like LA/Long Beach has improved somewhat as arrival volumes fall, but a surge of container imports is expected once Shanghai reopens. The influx – just as this year’s early peak season gets underway – is likely to make congestion worse and put upward pressure on rates once again.
- Asia-US West Coast prices (FBX01 Daily) fell 2% to $15,552/FEU. This rate is 162% higher than the same time last year.
- Asia-US East Coast prices (FBX03 Daily) were level at $17,148/FEU, and are 176% higher than rates for this week last year.