Container shipping: When Shanghai reopens

Chaos in the supply chain predicted when shipping traffic resumes in Shanghai.

According to expert estimates, the supply chain disruptions led to 260,000 TEU not being shipped from Shanghai in April alone.

Predictions are mounting across the shipping industry that there will be renewed disruption, backlogs and possibly even "chaos" as China looks to resume operations in Shanghai soon. After an eight-week shutdown due to its zero-tolerance COVID-19 policy, this will be a difficult endeavour. The diversion of ships increased rapidly from mid-April, resulting in more and more export cargo not being shipped, and now the resumption of operations is expected to come just as the shipping industry is traditionally heading into a peak season as retailers build up their inventories for the end of summer and the subsequent Christmas shopping season in the US and Europe.

This year's summer freight season surge is predicted to be even more chaotic for global supply chains than the peak season in 2021, with half of respondents to the latest Container xChange Industry Pulse Survey saying they expect the 2022 peak season to be "worse" than last year. A further 22 per cent expected similar challenges to 2021, while only a quarter of respondents said they expected this year's peak season to be less chaotic than 2021.

This is despite the dramatic progress that ports around the world have made in reducing or eliminating their backlogs. In the US, for example, Charleston recently declared that at most one or two container ships are still waiting at anchor and congestion has been eliminated. The twin ports of Los Angeles and Long Beach also report that they have reduced congestion by two thirds. The Marine Exchange of Southern California reported yesterday that only seven container ships are still waiting at anchorage, while another 30 ships have made reservations and are slow moving or waiting further out to sea. This is a decrease from the peak of over 100 container ships waiting at the beginning of 2022.

The peak season for container shipping traditionally takes place in the third quarter of each year, when retailers build up their stocks. All indications are that we will see a significant increase when export backlogs are shipped.

Source: The Maritime Executive