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  November 30th, 2022 | Written by

China logistics still Struggling with COVID

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So far, the implications for ports and airports appear not to be too serious, although why this is the case in not clear, as many major cities and regions are in some form of emergency measures. Ominously, the city of Shenzhen has issued a “work from home” order despite the wider region appearing to relax measures in the face of public disturbances.

Chinese state media reports that the neighboring port of Guangzhou, “has seen a limited impact on logistics and trade so far thanks to the local government’s launch of dynamic epidemic control measures to bring down the possible impact of the outbreak and quick reining of the virus.”

Ports further up the coast also seem to be unaffected. For example, the city of Dalian relaxed measures at the end of last week.

However, the city of Shanghai, which is the location for China’s largest container port, has just embarked on a further round of restrictions, with mass testing, business closures and movement restrictions. In the past such measures have led to serious disruption at both ports and airports, with truck-traffic in particular unable to drive through the city.

Similar measures are reported to be being applied in Chengdu and Wuhan, with both production and logistics activities being disrupted. Wuhan is a significant river port on the Yangtse and a key feeder location for Shanghai. Last week saw unrest in Zhengzhou in response to the imposition of new measures, with the most high-profile disturbances at the large Foxconn production and logistics hub in the city.

The situation is all the more febrile due to the political implications. The central Chinese government has attempted to articulate a change in policy over COVID measures, emphasizing a shift away from sweeping quarantine policies. However, it does not seem that these new policies are being applied on the ground. There has been extensive public unrest in reaction to these measures.

Judging by the little emerging from China, it seems that much of the regional and national government is keen to keep production and logistics operations continuing. However, it is unclear how successful they will be in the face of other parts of the state that seem wedded to a more extreme response.

The immediate implications for air and sea freight do not yet seem to be at the level of seriousness seen in 2021, when a number of major ports in regions such as the Pearl River Delta and Shanghai reduced operations to a minimum. What the present situation implies is that sea and air freight will recover at a slower rate than had been assumed. In particular it would appear that markets such as aircraft belly freight will remain short of volume.