Shanghai port congestion

When it seems that the pandemic is coming to an end, in China, they are trying to control the biggest resurgence of Covid-19 infections yet, obligating them to confining several cities, including Shanghai.

Shanghai is a key city for the world’s economy, as it is home to the port that moves the most containers in the world. The closure of this port has worsened the already bad ships congestion and has created logistic bottlenecks that are affecting incoming and outcoming maritime transit. There are hundreds of ships waiting to enter the port to load and unload merchandise, and the situation is worrying. Shanghai is the world’s main distribution hub for clothing, raw and energy materials like liquified petroleum gases for example.

The lack of personnel in Shanghai’s port is delaying even more the handling of the documentation necessary for ships to unload their cargo. To worsen the situation, the road transport paralyzation, is making bulk carriers of metals such as iron and copper to be stranded in high seas waiting for trucks to reach the port and take this cargo to the processing plants. Therefore, the operators are working with the existent inventory to try to cover for the production lines.

Furthermore, the container storage centers are closed and the capacity of the port’s yard is reaching its limit, especially for temperature-controlled cargo, that is being sent to other ports due to the lack of power connection points.

Big companies are warning about the obstruction of the supply chains and threatening to close down if the situation doesn’t improve as they must stop production and are not being able to cope with the high demand from their customers. It is hard to quantify the damage caused by it, but what its clear is that there will be a global supply problem, and that could cause a possible domino effect.

And lastly, another big concern is the impact on inflation, which is at regional maximum levels, and the blockage in Shanghai can cause shortages on products and the consequent rise of prices, which were already rising due to the Russia-Ukraine conflict.

Transglory team