China appears to be gradually easing its lockdown of Shanghai, but that won’t bring immediate relief to global supply-chain congestion, according to a major shipping company.
Shortages of rail, port and trucking workers in China and the US need to get resolved quicker than is currently happening as they are delaying ships at the world’s major ports, said Jeremy Nixon, chief executive officer of Ocean Network Express Pte.
“Every government is doing their best to address the issue, but labor shortages still exist and infrastructure shortages still exist,” Nixon said in an interview Tuesday. “We’re putting more ships into service, but we can’t magic up more when we’re running out.”
The world’s supply chains have taken a battering this year from China’s Zero Covid policy, which has hampered the production and delivery of everything from bathroom faucets to Apple iPhones. At the same time, trucker and rail worker shortages in the US have made it difficult for industries to move their goods, prompting the Biden administration to step in.
From Los Angeles to Hamburg, scores of containers ships are waiting for weeks to berth at ports, Nixon said. That wait is three weeks at Vancouver in Canada, and there’s currently a queue of 130 vessels waiting off the world’s biggest port in Shanghai, he said.
While the Chinese city’s lockdown is slowly being eased as Covid-19 cases drop, the number of container ships spotted in the Shanghai and Ningbo-Zhoushan region is still 11% above the median in the last year, according to shipping data compiled by Bloomberg. And the volume of container goods moving in or out of Shanghai port by truck and train has declined over the past week, according to data from FourKites.
Some shippers have tried to shift to air routes but have faced similar problems, with many flights being canceled as a result of staffing shortages, according to digital freight forwarder Zencargo.
The disruption to supply chains has extended further south to other ports. The number of container ships off Shenzhen and Hong Kong hit a seven-month high of 184 vessels Tuesday. At this time last year, there were just 95 vessels in the area.
Nixon said ONE is planning to reduce the number of ships that it charters from other parties, adding that about 15% of the company’s fleet is hired on short-term contracts lasting up a year. The company is looking at ordering new ships that will run on cleaner fuel, he said.