The end of supply chain turbulence is still not in sight. Even after the difficult year of 2020, the pandemic has hit China again at a key center of global trade: the province of Guangdong. A new outbreak of Covid-19 has resulted in significant operational restrictions at Shenzhen's Yantian Port since 25 May 2021.
The Yantian Port restrictions have more serious consequences than did the Suez Canal blockage in March. Since the beginning of June, the partially open port is running at only 30% of its previous capacity. Long queues and delays are forcing logistics companies to reorganize supply chains.
From rail to sea, challenges are everywhere
“In the last six months, rail deliveries from the Middle Kingdom to Russia took 40-50 days. Hence, many of our clients decided to redirect their shipments via sea. However, at this point, exporters are facing new challenges. Cargo traffic rerouted from Yantian to Shekou and Nansha is triggering additional port congestion. The situation has resulted in 2-3 week delays for shipments and deliveries,” comments Vladislav Martin, Head of the EU/China Rail Transport Department at AsstrA.
As of late May / early June, 20,000 TEUs of cargo and 50-60 vessels cannot proceed to their destinations. They cannot be redirected to another port, as Chinese regulations concerning customs documentation are quite strict and must be prepared for departures from specific places.
Truck traffic has also been restricted around the Huangpu and Foshan ports. Warehouse operations in the southern region of China are restricted, and it takes a miracle to find available vehicles there. In addition, regulations require drivers to show negative Covid-19 test results before entering these ports.
“Despite some volume being able to go through Hong Kong, logistics market conditions are tense. Legal barriers make it difficult to deliver cargo from China to Hong Kong with further transit to European countries like Poland,” emphasizes Vladislav Martin.
Big money, little hope
Another wave of coronavirus, a shortage of available containers in China, and port restrictions have buried any hope of price stabilization. Freight forwarders are already paying ten times more for containerized sea transport, and the situation is not expected to improve. Transport and logistics companies will feel the consequences of these restrictions until at least December 2021, provided that Shenzen returns to full operation by the end of the summer holidays.
In these conditions, rail transport is not a good alternative. Containers are stuck at Chinese, CIS, and EU border crossings. Rail and sea containers are in extremely short supply, with high demand and frequent overbooking.