Almost 500 container ships are stuck in congestion outside Chinese ports as President Xi Jinping’s “zero Covid” policy wreaks havoc on global trade.
Repeated restrictions designed to stamp out the fast-spreading omicron variant have led to shortages of staff to unload vessels in the port city, and a lack of lorry drivers who can transport goods to and from ships.
Cities including Shanghai are under strict lockdowns to try to bring infection rates under control, while Hong Kong’s soaring death rate has shown the danger the virus still poses to populations with relatively low vaccination rates among the elderly.
Figures from Bloomberg indicate 477 ships are waiting off the coast, adding to queues around the world which have blighted the supply of consumer goods, factory supplies and building materials since Covid struck.
Johanna Chua, an economist at Citi, said there are risks of supply chain problems spreading further across the country and internationally, as “Shanghai is a major exporter of China’s electronics and vehicle exports”, which is particularly important for manufacturers in South Korea, Taiwan, Vietnam and Japan.
“While Shanghai port has so far stayed in operation 24 hours a day inside a “closed loop” bubble, which requires workers to stay on site, there are multiple reports of blocked land traffic, trucking issues and closures of warehouses creating logistic bottlenecks and rising costs,” she said.
“This is also having some spillover impact on logistics of Jiangsu and Zhejiang provinces, major manufacturing hubs, which together account for 29pc of China’s total exports.”
These are having global effects.
Sanjay Raja, economist at Deutsche Bank, expects inflation in the UK to rise above 8pc in part because of global supply issues.
“We see a very strong cocktail of inflationary pressures coming from April, as energy bills rise, food pressures remain elevated (and continue to rise), and core goods pressures continue to be supported by supply chain bottlenecks,” he said.
It comes after data from Ocean Network Express showed around 10pc of container ships worldwide are stuck in congestion, causing more bottlenecks in global supply chains.
