If you thought standing in a queue at Home Affairs was horrendous then take a look at the number of ships waiting outside the port of Shanghai, China, in the satellite image in this link: Visual Capitalist (each dot you see is a ship). Supply chain snarl-ups were widely publicised in the media at the start of the pandemic but, as this image shows, we’re not out of the woods yet.
Covid outbreaks have appeared in various Chinese cities in recent weeks, with confirmed cases appearing in Shenzhen, Shanghai as well as Beijing, leading to localised lockdowns and government mandated testing. This all has the knock-on effect of hindering economic activity and decelerating economic growth. China continues to enforce its “Zero-Covid” policy leading to large scale closures of business and industries depending on where confirmed cases appear. There have been several different approaches China-based businesses have adopted to deal with this, one of the more interesting being the so-called “closed loop” approach. This is an approach that was initially used during the Beijing Winter Olympics and many businesses have begun implementing this in their workplaces to ensure that they can continue to operate during Covid-related lockdowns. It’s rather simple and eloquent solution – live, eat and sleep at work to prevent virus transmission. While this keeps businesses operating (likely at reduced capacity / efficiency) it is still a far cry from full-scale production levels and is likely proving to be mentally taxing on employees who are often sharing sleeping quarters and bathrooms.
As could be expected this invariably slows down operations at major ports – in this case the port of Shanghai which accounts for 1/5th of China’s export containers. The satellite image was captured by the Sentinal-1 satellite and shows over 470 ships waiting to dock as of 19 April 2022. The port is still operating but shipping volumes have dipped significantly in the past few weeks and are down almost 30% compared to pre-pandemic levels – leading to major congestion and associated backlogs. Naval traffic has also started picking up at the nearby ports of Ningbo and Yangshan as vessels look for alternative ports to dock at. As you can imagine the knock-on effects of this will be felt globally as this is one the busiest international ports in the world. For those interested, take a look at the amount of ships waiting outside the port using real-time data on MarineTraffic.
Unfortunately, it seems that hopes that the supply chain nightmares caused by the earlier stages of the pandemic would ease are misplaced and its likely that this will further exacerbate the delays and shortages businesses globally have been dealing with for some time.
We’re all pretty used to being told the system is offline at Home Affairs after waiting in line for sometimes hours but in this case the system is kind of working I guess, albeit slowly? I suppose it’s more akin to a Home Affairs official telling you that the system is slow so it’ll only take a few more days of standing in line before they can attend to you. For all our sakes and the sake of some kind of recovery in the HSCEI let’s hope these shipping delays get cleared soon.