Forwarders say return of 'business is usual' is 'months' away despite Shanghai reopening

Tue 7 Jun 2022
Posted by: William Barns-Graham
Trade News

China Covid

Shanghai’s reopening on 1 June, following a two-month lockdown, should not be read as a return to ‘business as usual’, forwarders have warned.

Manufacturers in the city can now operate without special permits or closed-loop conditions, while residents with a negative 72-hour Covid test result can move freely about the city to access offices, public places and transport.

Thomas Gronen, head of Greater China at Fibs Logistics, said the city’s reopening “will take weeks, if not months, to come back to anything considered as normal for the industrial output volumes, and then the shipping container volumes.”

Gradual return

Crane Worldwide Logistics told the Loadstar that ocean carrier schedules will gradually return to normal in June.

“However, with all factories re-opened, we expect volumes will also increase gradually, especially from the middle of June onward,” it added.

Export bounce

Despite the lockdown, China’s exports rebounded in May, expanding by 8% as factories reopened and supply chain disruptions calmed, Reuters reports.

Official data showed the average daily container throughput at the Port of Shanghai rose 7% in May from a month earlier.

Normalisation

According to local media accounts, reported in Supply Chain Brain, daily container throughput is about 95% of normal levels.

Shipping delays have been significantly reduced, with container vessels waiting 31 hours on average near Shanghai as of 1 June, compared with 69 hours in late April, according to VesselsValue. 

The trucking situation could return to normal within the next one to two weeks, digital freight forwarder Flexport reports. 

West Coast woes

However, the easing of port congestion in Shanghai is expected to unleash a wave of containers on the US West Coast that could clog supply chains further.

Citigroup said in its June supply chain report that the global challenges look to be as acute as any time over the past two years.

S&P Global Ratings has revised down its full-year economic forecast for China to 4.2% from 4.9% due to China’s Covid policy affecting domestic employment, investor sentiment, supply chains and broader capital markets.

Tech disrupted

Tech companies, which were hard hit by shutdowns and shortages, will not see an immediate return to growth, reports ZDnet.

Cisco earlier this month forecast soft earnings next quarter because of congestion it expects in shipping ports and airports, affecting both exports from China and imports of raw materials to China.

Apple has predicted its Q3 2022 sales will be down by as much as $8bn due to supply constraints in China and production of the iPhone 14 has reportedly been knocked several weeks behind schedule.