China’s COVID outbreak has broken out again. Under the relevant controls, such as placing millions of people under lockdown, curbing transport, and closing factories, which may further strain China’s supply chains.

According to Reuters, recently, there have been long queues of container ships outside major domestic ports.

The factories that produce everything from flash drives to car parts at major manufacturing centers, including Shenzhen and Dongguan, are paralyzed.

Shipowners, analysts, and supply chain managers said that while China’s major ports remain open, vessels continue to dock, congestion is increasing, and some container ships are re-routing to avoid the expected delays.

Container traffic at Yantian Port in Shenzhen, the world’s fourth-largest container terminal, decreases significantly as port workers, truckers, and factory workers stay home.

It’s worth noting that there are currently 34 ships waiting to dock off Shenzhen, compared to an average of seven a year ago.

In the eastern Chinese port city of Qingdao, about 30 ships are waiting to dock, compared to an average of seven last year.

Lars Jensen, CEO at Vespucci Maritime, a container shipping advisor, said, “This implies that it will become difficult to get cargo to and from the ports and hence whether the terminals are open or not becomes a moot point,”

“It will have a disruptive impact on the supply chain – in turn prolonging the current supply chain crisis.”

Other nearby export hubs, such as Hong Kong and Shanghai, also suffer difficulties. Vessels will have to wait until congestion clears before loading cargo, leading to possible global inflation.

Niels Rasmussen, Chief Shipping Analyst at BIMCO, a shipowner association, said, “The Chinese authorities’ zero-tolerance policy would seem to indicate a high likelihood of further lockdowns,”

“A slowdown in Chinese exports will exacerbate supply chain delays and reduce inventories held by businesses, which could drive further price increases.”

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