Another Round of COVID Testing in China Means Drayage Delays Coming

After the discovery of a case of Covid, the Chinese authorities decided to stop the activity of one of the main ports of the country, essential for international trade. Delays in deliveries and a further increase in the price of sea freight are expected.

Examples that make us fear the worst.

Faithful to its zero-tolerance policy with regard to COVID, China did not hesitate in August 2021 to suspend all activity on one of the terminals of the port of Ningbo following the appearance of a COVID case among employees. Indeed, China's strategy against COVID is to carry out massive tests on large samples of the population by isolating the cities concerned. To this end, economic activities in these areas are slowed down, as we saw in 2021 in Ningbo. This suspension of activities in Ningbo already followed the closure, in May 2021, of another large container port terminal, that of Yantian, again due to the appearance of a cluster among dockworkers. In April 2022, around a third of the world's 1,800 stranded container ships were in or near Shanghai following the city's lockdown still due to a new wave of COVID. These examples show us what world trade may look like as China recently announced a new lockdown impacting Ningbo Port.

Significant delays to be expected

According to the Sea Intelligence institute, in May 2022, the schedule reliability of the boats was only 30 to 40%, following the same trend observed in 2021. These delays were due to various factors, but there is no doubt that the blocking of Chinese ports has a lot to do with it. This trend will continue to continue as major port cities in China continue to be locked down by Chinese authorities. The delay means money, and speaking of costs, these have exploded in 2021. The Freightos Baltic index, which serves as a benchmark on the main maritime routes for the price of transport, has steadily climbed from around $2,100 (€1,780) in the fall of 2020 to $4,000 (€3,390) in January 2021, before crossing the $10,000 (€8,500) mark at the end of July 2021. If a similar situation were to breed in China, it is very likely that shipping costs would increase.

In such a context of a future crisis, what alternatives could exist to overcome the congestion of sea freight?

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