Despite efforts to restart manufacturing, the seven-week lockdown in Shanghai has sent export volumes plummeting. In response to dropping demand for freight, ocean carriers have continued to cancel a significant number of sailings out of Asia, according to Freightos. This additional reduction in capacity may have contributed to Asia – US West Coast rates climbing this week, though prices remain 15% lower than before the lockdown in early March, and Asia – North Europe rates remain 21% lower, both at levels not seen since last summer.
But authorities in Shanghai have just announced that the city will begin reopening in the coming days with aims for a gradual return to normal by late June. Some in the industry think a gradual reopening will be manageable, and some ocean carriers are already reporting a general decline in demand independent of the situation in Shanghai.
Meanwhile, many observers anticipate that the reopening will open up floodgates of pent up demand, and send a surge of ships and containers to already-congested European and West Coast US hubs – with Canadian and East Coast alternative ports already stretched thin and peak season rapidly approaching.
Both scenarios for the reopening are likely to renew at least some upward pressure on rates and cause some increase in delays, but like so much else that has been unpredictable over the course of the pandemic, the degree of the impact will remain to be seen.
- With ocean carriers removing capacity, ocean rates out of Asia may have stopped their slide, though Asia – US West Coast prices are 15% lower than before the Shanghai lockdown, and Asia – Europe rates have declined 21% since early March.
- Authorities in Shanghai announced that the reopening will start soon with an aim of a full rebound by late June. Though some observers expect surging exports, container rates and congestion levels as a result, others think that ocean logistics will be able to absorb a gradual reopening without extreme detrimental impacts.