NEWS

Risk is forecast in the container market in 2022 following the Covid-19 outbreak in China.

Friday, June 11, 2021

The consequences of the terrible pandemic continue to affect the economy and international logistics. The Covid-19 outbreak in southern China and the major Yantian port terminal is causing further problems and delays in a container market already affected for several months, “significantly increasing” the risk of capacity problems in 2022.

Southern China is struggling to contain a new Covid-19 outbreak in the Guangzhou region, focused on the main Yantian port, where the port closure as a measure to control the new outbreak is putting great pressure on the already affected one container market that has skyrocketed maritime rates.

The situation before a possible new outbreak “significantly increases” the risk that the severe lack of capacity in the container market will continue in 2022 and not only that but also increases the problem, said logistics specialist Lars Jensen, analyst and executive director by Vespucci Maritime.

The bottlenecks that have emerged recently in Chinese ports will lead to more delays and waiting lists to be able to load new cargo, which means that ships can make fewer round trips than usual.

 

Repercussions that will last another 2-3 quarters and possibly until 2022.

 

The executive vice president of maritime logistics at logistics company Kuehne + Nagel, Otto Schacht, has commented that the repercussions will be felt in the market for at least another six to nine months.

“Whoever thought the global container shipping disruption caused by the westcoast terminal situation, followed by the Ever Given/Suez chaos, is improving, better look daily at the new delays in front of the port of Yantian,” writes Executive VP Schacht in a post on LinkedIn and adds that there are “vessels waiting for more then a week, this moment over 30, many will now be rerouted.”

Shipping companies such as Maersk, CMA CGM and MSC have already started rerouting ships and significant delays are expected.

Growing closures in southern China, a crucial industrial center, are also affecting the country’s exports.

China’s exports have grown by nearly 28 percent in May year-on-year, a slower pace than the 32.3 percent reported in April and much lower than analysts’ expectations for export growth of 31.1 percent.

The problem lies in the importance that the Chinese market has in the global economy, it will directly affect world logistics and specifically the routes to Latin America and therefore to Mexico.

The Chinese market is experiencing a slowdown that no one prevented and that leaves an Asian market less competitive as the logistics routes to and from this country have tripled.

The opportunity in this situation lies in the substitution of raw material from China. Produce products that the US imports from China and seek the opportunity to export them to gain greater participation with the North American neighbor.