Maersk Cancels Six Ningbo Calls as World Watches for China’s Next Move
With no indication from the Chinese authorities as to the
timeline or plan for the resumption of operations at the closed container terminal
in the Ningbo-Zhoushan port complex, the shipping lines have been left
scrambling to come up with strategies to minimize the disruptions. At the same
time, shippers who have already been struggling with bottlenecks, rising fees,
and delays are waiting and watching and even the international financial
markets are getting nervous about the potential impact.
Chinese authorities and the port operator said that they are
awaiting further word from the local health authorities that on short notice
ordered the terminal closed on August 11. Reports surfaced indicating the
individual worker who tested positive had a negative test last week but came up
positive at mid-week. The health authorities have only said that they were
disinfecting the area and expanding testing. The individual reported lived in
one of the dormitories for the port complex raising concerns that he could have
been in close contact with other workers.
UK-based (re)insurance risk management consultant the
Russell Group analyzed the port operations reporting that it believes “China’s
partial closure of the port of Ningbo threatens $172 billion’s worth of global
trade.” Among the biggest potential impacts, Russell points to $39.2 billion
work of integrated circuit board exports. Many global companies had already
reported shortages and increased wait times for electronic components which
according to this data could be further exasperated by the closure of the
Meishan terminal.
According to sources quoted by Argus, they are already
seeing an impact on metal shipments and bunker fuel supplies. In addition to
being China’s second busiest container port, the Ningbo-Zhoushan port complex
is the largest overall port in the world handing not only containers but all
forms of cargo.
The closure also appears to be having a quick impact on
other ports of the port complex’s operations despite assurances from the
Chinese port agents that all the other terminals were operating normally. A day
after advising customers that vessels in the 2M alliance mainly call at other
terminals Maersk cautioned that waiting time has already increased by up to
half a day for a minimum now of two days.
Maersk is also now advising customers that six vessels on
the route between Asia and South America were scheduled to call at the closed
Meishan terminal. In August all six of those vessels will omit Ningbo and
Maersk is advising customers to try to re-arrange for shipment via CMA CGM.
The average number of weekly calls to Ningbo has already
plummeted 70 percent reports the logistics platform project44. Their analysis
reports that from nearly 200 container vessels it fell to less than 60 vessels
this week. “Ocean Carriers are diverting and initiating Blank Sailings to and
from the port. project44 has recorded 37 blank sailings as of August 13.”
Based on these reports, the global financial markets are
also getting nervous over the scope of the impact both from this closure while
worrying if it could portent more COVID-related impacts to global trade.
S&P reported today’s decline in the crude oil price citing the closure at
Ningbo.
“Many experts are worried that the disruption may have a
large impact on the holiday season, particularly in the US,” says Russell in
its analysis. They reported that Ningbo exports 22 percent or $16 billion worth
of exports to the US annually and their data shows, “that 11 percent or $8.3
billion goes to Long Beach, California,” which they noted is already
experiencing a large surge in demand with a backlog of ships waiting to enter
the port.
Russell is warning customers of the fragility of global
trade saying that fragility means that any slight disruption to the network of
trade, whether that be a closure of a port or a blockage of a shipping route,
creates chaos for shippers, global supply chains, and ultimately consumers.
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