Wednesday 8th December 2021
China has imposed a 14-day lockdown at Zhenhai, one of the six districts in Ningbo, amid an increase in coronavirus infections, prompting concerns of port disruptions and worsening supply chain blockages, market sources said.
“Just received an update from our China contacts…Zhenhai district has been locked down due to three positive cases of COVID-19. The lockdown is for 14 days,” a source said. An importer based in the US confirmed the same information, adding that the company’s Shanghai office has been closed.
“We need to now ascertain the impact on port and terminal operations and how much trucking and depot operations will be affected,” a source based in Singapore said. However, this also means other regions could also soon see similar restrictions, the source said.
“The rising COVID infections may lead to shutdowns at Ningbo and some other ports in China, adding to congestion and cargo backlogs,” a source with a UK-based logistics company said. “this is only the beginning — the first quarter of 2022 is going to be a complete wreck.”
The increase in coronavirus infections may further disrupt the ocean freight industry by triggering higher demand for PPE kits and masks, in turn leading to higher freight rates.
“The traditional agricultural trade season also starts in January and a simultaneous rise in PPE shipments could choke the system further,” an exporter based in India said.
Thursday 9th December Update:
More than 300,000 people have been tested for coronavirus in a district in the port city of Ningbo, following an outbreak of the illness, detected on Monday.
The district of Zhenhai has been put on a two-week lockdown after five people tested positive for Covid-19. Early indications are that the measures taken by local authorities have yet to harm productivity at the port. Ningbo is home to the world’s largest port – it was partially closed in the summer for a fortnight after another Covid-19 outbreak.
Beijing’s strict zero-Covid policy has curbed local outbreaks with mass testing, snap lockdowns, vigilant surveillance and extensive quarantines. The country has struggled over the past couple of months to stamp out the illness however. Since October 17, China has reported at least one locally transmitted case everyday, as local outbreaks continue to flare up one after another with increasingly short intermissions.
Thursday 16th December Update:
Lockdowns across China’s Zhejiang province have prompted multiple factory closures, and new restrictions have been placed on trucking.
China reported new Covid cases in Tianjin and Guangzhou this week, including the Omicron variant, but the outbreak in Zhejiang, another major manufacturing heartland, remains the most serious.
For example, 20 listed companies operating in the province have suspended operations, according to Reuters, including battery, textile and pharmaceutical manufacturers.
They include those in Ningbo’s Zhenhai district, a key petrochemicals hub, currently under lockdown, and Shangyu district in the neighbouring city of Shaoxing, under partial lockdown, with all factories other than those producing essential items and PPE required to suspend production.
According to Chinese media, the restrictions have impacted textile firms and their access to Ningbo-Zhoushan Port, since truck drivers are reluctant to enter the area due to quarantine requirements. Furthermore, Ningbo has tightened restrictions on truck drivers entering its container terminals, depending on which areas they have visited previously.
There are currently 30 container vessels waiting outside the port of Ningbo, according to MarineTraffic.
Elsewhere, Hangzhou, the province’s capital, is under partial lockdown, and hundreds of domestic flights out of the city’s airport have been cancelled.
ANZ Research said the disruption to Zhejiang manufacturing would mostly affect fibre and textile production and compared the likely supply chain impact to the power rationing experienced in September and October.
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