China shipping backlog leaves factory owners with nowhere to put goods

Ji Siqi, South China Morning Post

A month after container shipping operations returned to normal at China’s Yantian Port, factory owners are still feeling the pinch from a debilitating three-week shutdown, with warehouses chock-full of goods awaiting export.“While we can see the cargo is moving through the port again, this event is shaping up to be one of the most disruptive of the year,” said Josh Brazil, vice-president of marketing at logistics service provider Project44, in a note earlier this month.In Guangdong, a major manufacturing province that houses the Yantian International Container Terminal, manufacturers and exporters across various sectors – including large household appliances, commodities and toys – are still facing choke points in the supply chain as they vie for space on the freighters to get their cargo out of the country.“Everyone’s warehouses are still pretty full now,” said Derrick Tian, who works for a bicycle-assembly factory in Shenzhen that exports bikes to the east coast of the United States. “Our warehouses can’t take in any more bikes, now.”While since cleared, the Yantian congestion that spanned from late May to mid-June looks to affect the retail supply chain for weeks or even months, with some analysts saying Christmas shipments could be affected by massive backlogs. Located in the Pearl River Delta, the port – responsible for a tenth of China’s foreign container traffic – was forced to close due to a coronavirus outbreak among dockworkers.Groups such as Project44 anticipate some Christmas presents will be delayed. And consumers may need to brace themselves for potentially more expensive goods in the coming months, as exporters look to pass on additional logistical and transport costs.“Some of these additional supply-chain costs are being taken on by the end customers or the brand … in the demand market,” said Akhil Nair, vice-president of global carrier management and ocean strategy at Seko Logistics. “Somebody is definitely taking on the cost; in some cases, they are splitting the cost with the supplier.”Some manufacturers have managed to divert their cargo to other ports in the Pearl River Delta, including Shekou and Nansha, which have also seen considerable congestion and price increases. Others have even gone farther north, including to Ningbo Port near Shanghai.“We used to export through Yantian and Shekou,” Tian said. “But we’ve been recently sending out price inquiries to Ningbo Port and a port in Fujian province. As a result, the prices of land freight are also surging.”The Ningbo Containerised Freight Index (NCFI), which reflects the fluctuation of freight rates of international containers departing from the Ningbo Port, quoted a 77 per cent price increase during the week ending July 16, compared with mid-May, before the Yantian shutdown.“Re-routing things to northern China or central China ports is a good option … but there has not yet been enough diversion to alleviate the pressure,” Nair said. “In the market, overall, it’s extremely difficult currently to find that many alternative solutions, as there’s a huge amount of cargo that is backlogged.“Even though the [Yantian] Port is operating quite well now, there is still a backlog. I definitely think that we’re not [going to see the problem solved] before early- to mid-August.”Meanwhile, the subsequent increase in supply-chain costs will continue taking a heavy financial toll. Tian, for example, said his bike factory has already raised downstream prices.“I think eventually the costs will pass on to the consumer – maybe right now it has not yet been fully passed on,” Nair said.Despite the extended logistics disruption, China’s total exports in June grew 32.2 per cent to US$281.42 billion, compared with the same period last year, according to official figures released last week.“This does not mean the port closure had no impact, however. It has clearly contributed to increased shipping congestion and higher freight rates. It may also have acted as a partial constraint on export volumes, which were 3 per cent below their January peak last month,” Capital Economics senior China economist Julian Evans-Pritchard said in a note last week.The elevated shipping costs, in particular, could weigh on China’s export growth in the future, according to Shanshan Song, Greater China economist at HSBC.<div>RELATED VIDEO</div><figure class="op-interactive"><iframe allow="autoplay; fullscreen" frameBorder="0" height="100%" id="ivsplayer01" scrolling="no" src="https://player.ivideosmart.com/ivsplayer/v4/dist/html/iframe-src.html?iframeid=ivsplayer01&amp;key=e8c22c015ca9eafa76f1e3edfa03c603&amp;spid=3001339&amp;vid=1649795" width="100%"></iframe></figure><div class="iwantbar">Watch more in <a href="//www.iwantv.com.ph/">iWantv</a> or <a href="//tfc.tv/">TFC.tv</a></div>

A month after container shipping operations returned to normal at China’s Yantian Port, factory owners are still feeling the pinch from a debilitating three-week shutdown, with warehouses chock-full of goods awaiting export.

A month after container shipping operations returned to normal at China’s Yantian Port, factory owners are still feeling the pinch from a debilitating three-week shutdown, with warehouses chock-full of goods awaiting export.

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China shipping backlog leaves factory owners with nowhere to put goods

China shipping backlog leaves factory owners with nowhere to put goods

Ji Siqi,

South China Morning Post

Published Jul 20, 2021 12:24 PM PHT

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