150 COVID cases caused a global shipping disruption that’s ‘worse’ than the Suez Canal blockage
About 150 COVID-19 cases. That’s all it took to snarl sea traffic for four weeks, causing a shipping disruption that one executive said is worse than the Ever Given’s infamous blocking of the Suez Canal.
On May 25, five crew members aboard a container ship in Guangdong, China tested positive for COVID-19. Over the coming days, a handful more cases were found among residents of the surrounding city.
That number of COVID-19 infections would be a blip in places like the U.S. or U.K., but China has mostly tamed the coronavirus by abiding by a zero-tolerance policy for cases. The outbreak in Guangdong was a full-blown crisis.
Officials in Guangdong ordered compulsory testing for all Yantian residents and suspended operations at the port, the world’s fourth largest that processes around 30,000 shipping containers every day.
The shutdown triggered a worldwide shipping backlog that may take months to resolve, a testament to just how fragile the world’s supply chain is, even after eighteen months of pandemic disruptions.
Even before the coronavirus cropped up in the container ship crew, China’s southern province of Guangdong had been on high alert for outbreaks. Daily case numbers had increased by single digits the preceding week, but even those small upticks sent authorities into overdrive to suppress the virus.
By June 1, the provincial capital Guangzhou placed a travel ban on all 15.3 million residents, unless they had a negative COVID-19 test from the past three days. Hundreds of flights at Guangzhou’s international airport were cancelled, entire neighborhoods were forced into lockdown, and the city began mass testing campaigns.
The counter measures worked. The daily case count retreated to zero on Tuesday. As of Thursday, the city of Guangzhou had recorded 151 cases since the resurgence began.
What’s the fallout?
Port authorities originally planned to close Yantian for just two days but, as case numbers rose, port operations were unable to return to normal. As of Thursday, operations had returned to 70% of capacity and port operators expect to resume full functionality by the end of the month.
The port disruption, now in its fourth week, has backed up sea traffic. On Thursday, Bloomberg reported over 130 ships were anchored off China’s southern coast, awaiting port. Yantian—which services the tech hub of Shenzhen and carries some 90% of China’s electronics exports—can normally handle 100 ships a day, but waiting times to berth at the port have extended from half a day to over two weeks.
“I would say this for us is a much bigger disruption than the Ever Given getting stuck in the Suez Canal for some days because of the duration and the importance of Yantian as a gateway,” Vincent Clerc, chief commercial officer at Danish shipping giant Maersk told media Tuesday.
The Ever Given ship was infamously stuck in the Suez for six days in March, blocking a vital artery in global shipping lines. Maersk says it is now facing delays up to 16 days at Yantian. Shipping companies have rerouted other freight to nearby ports in China, creating further congestion and introducing extensions on delivery times, as the cargo needs to travel further.
When will it clear?
Yantian hopes to resume full operation by July, but the ripple effects of the shutdown could be felt well beyond next month.
“It’s conceivable that logistics delays and high freight costs will persist over the next few months, with a risk that these strains might only start to recede by the fourth quarter, if not later,” says Nick Marro, lead analyst for global trade at the Economist Intelligence Unit.
Delays could be compounded by an upcoming demand surge, Marro says, as Western importers increase orders ahead of Christmas. Given the extent of disruption this past year, there’s also the risk importers will order more than usual to hedge against future supply disruption.
More importantly, with economies across Asia battling new waves of COVID-19 and the emergence of more contagious variants, it’s possible that this sort of disruption could occur again.
“The Yantian port event is actually a great illustration of the fact that we’re still in a very fragile situation, in terms of where we are in terms of fighting the pandemic,” Marro says.
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