Important update regarding Terminal situation in Ningbo and Air cargo market in China

Attention: Shipping Manager

• Terminal closure in Ningbo – Port congestion deteriorated

Meishan terminal remains closed for the sixth consecutive day due to COVID-19 infection among port workers. The suspension of a critical terminal at the Port of Ningbo, one of the world’s largest and busiest ports, has started to impact the global supply chain adversely. There are around 50 vessels waiting at anchor near the port, the average wait time for a berth is between 2 to 3 days. Additionally, the average number of weekly port calls has plunged by 70% as carriers are diverting and having blank sailings to/from the port to avoid severe congestion at the terminal.

This suspension has put further pressure on the already constrained shipping industry in China as congestion worsens across the country. While the global demand for exports from China continues to escalate, there are major delays in shipping and serious shortages of labour and equipment in the region. Consequently, global shipping has been affected negatively. We are seeing nominal capacity from Shenzhen port to North Europe, decreasing capacity at Long Beach port and increasing vessel delays at Long Beach and Los Angeles as a result of congestion in China.

• Freight rates continue to surge due to blank sailings

Freight rates on major trade lanes like Trans-Pacific and Asia to Europe have been reaching record-high levels. The figures are expected to inflate even higher as many ocean carriers are reported to be initiating blank sailings from Asia in October, around the Golden Week holiday in China. Furthermore, as operations at Ningbo’s Meishan terminal remain suspended, space availability and capacity from China are extremely limited.  This will also contribute to soaring freight rates in the next few months.

• Chaotic air cargo market in China

The pandemic outbreak in China, followed by new COVID restrictions, have resulted in a major crisis in air cargo shipping in the country as many operations staff resign and rates continue to soar. The airfreight market in China had deteriorated following the closure of Nanjing Airport earlier this month, with major airports in Shanghai, Beijing, Guangzhou and Tianjin all affected by strict quarantine measures. Shanghai Pudong Airport (PVG) has been the most impacted, many cargo flights have been taking off empty due to long handling times, which create major backlogs for upcoming flights. It has been reported that export cargo handling times are currently 2 to 3 times longer than normal.

Due to the serious labour and equipment shortages, many airlines are re-positioning their flight schedules, with significant flight cancellations from mainland China. Hence, air traffic from Hong Kong and/or Incheon is expected to rise as cargo flights will be diverting from mainland China to these nearby airports. The situation is forecasted to escalate in the upcoming weeks and backlogs will continue to accumulate as the overall impact on capacity to/from China is significant.

In addition, airfreight rates from China have been increasing substantially.

Meanwhile, airports across the US are heavily congested, especially in Los Angeles, Chicago and New York, with major backlogs at the warehouses and cargo waiting to be loaded/unloaded. Also, as the demand continues to rise and air cargo capacity remains extremely limited, rates are expected to reach extraordinary levels due to the huge imbalance between supply and demand.

(Source – The Load Star)

We will keep you updated with any further information.