New lockdowns in China are causing fresh disruption days after Chinese premier Xi Jinping doubled down on Beijing’s zero tolerance Covid-19 policies.
One of the hardest hit areas is the port city of Ningbo in China’s north-east, where freight forwarders such as Davies Turner are reporting slowdowns in operations.
“We are receiving reports from our partners in Ningbo detailing disruption to services as the area around Ningbo has gone into lockdown, in keeping with China's zero tolerance approach to managing Covid-19,” the UK-based forwarder said on its website.
Last week, the firm advised the terminal, port and warehouse in the city’s Beilun district were closed and that authorities had implemented the “whitelist” system for truck drivers who were certified as free of Covid.
However, despite these measures, trucking activity had been severely limited after a driver was found to have tested positive, the forwarder advised.
It said Shanghai could offer alternative freight services, although extra costs may apply.
Another UK forwarder, Ligentia, said operations had begun returning to normal, but permits were still required to enter and exit the Beilun district.
Earlier this month, DHL Global Forwarding said the Chinese government’s zero-Covid policy had impacted major manufacturing and exporting centres such as Chengdu, Dalian, Guangzhou, Shenzhen and Tianjin.
“While port operations are exempt from restrictions, manufacturing and inland logistics have already been affected to varying degrees,” said the company.
President Xi dashed hopes of changes to China’s zero-Covid policy at the Communist Party Congress last week.
Xi said the Communist Party had waged an “all out people’s war to stop the spread of the virus” and failed to address fears the measures were harming the Chinese economy and global supply chains.
“Even though everyone can see economic growth has slowed, [Xi] still wants to persist in zero-Covid. This will hurt people’s livelihoods,” said Simon Chen, a political science professor at National Taiwan University, on Voice of America.
Hopes that a rebound in cargo from China to Europe and the US would follow previous lockdowns affecting Shanghai have been dashed due to weak global economic conditions.
To many a supply chain manager’s relief, however, this has been reflected in falling shipping rates.
Shanghai’s ocean freight rates are at around a tenth of what they were during Covid-19 highs.
Carriers in Shanghai are charging about $2,000 to transport a 20-foot equivalent container to the US West Coast, compared with $20,000 in the midst of last year's vibrant post-lockdown trade rebound.
“What one hand gives, the other can take away,” Xiong Hao, assistant general manager at Shanghai Jump International Shipping told the South China Morning Post.
“Shippers made a killing over the past three years, but they may not be able to make a profit given the current freight rates.”
Shipping industry officials now describe the spiralling freight rates between 2020 and early this year as a “windfall” rather than the start of a “new normal”.