COVID-19 Outbreak in China could lead to Product Shortages during Holiday Season
Due to a recent coronavirus outbreak in Guangdong, China, authorities put in place strict COVID-19 restrictions that caused congestion at four major ports. Experts are saying these shipping disruptions could lead to a shortage of goods for the holiday season.
The current COVID-19 outbreak is only worsening the worldwide shipping crisis that has seen increased costs and lead to shortages on everything from semiconductors to chicken.
“Supply chains are more complex and delicate than ever,” Tom Fairbairn, an engineer at the middleware company Solace, said. To monitor disruptions, Faribairn recommends using a real-time data tool such as Unilever’s database.
“Retailers using this approach can say with confidence whether their Christmas inventory will be delayed or not,” he said. Otherwise, retailers might be “wasting existing stock, incurring unnecessary late fees, missing opportunities, and delaying deliveries.”
Because of new COVID restrictions at the port, a backlog of shipments is occurring at ports in Yantian, Shekou, Chiwan and Nansha. These new restrictions include disinfection checks and limits on the number of vessels allowed in.
“One of the biggest ports in China, has basically closed down for close to three weeks,” Nils Haupt, the communications director at the German Shipping firm Hapag-Lloyd, said about the port in Yantian. “They have some berths in operation, but nowhere near enough.” Haupt also stated that delays are increasing at the other three ports as well.
According to James Baker, container-shipping editor at Lloyd’s List, retailers are already placing their orders for the holiday season because of how long it is taking to ship product. This has also played a role in the current congestion at these ports.
“Traditionally, the peak season for container shipping starts in the third quarter as everyone stocks up for the holiday season in the west, but this year we’re just in a permanent peak season already, and heaven knows what’s going to happen come August or September. It could get crazy,” Baker continues.
Baker expects the delays in shipping to last for at least another year – and until things ease up – North American and European customers will just have to expect shipping delays.
As of Friday, June 11, there were 50 container ships waiting to dock in the Outer Pearl River Delta. The same period last year, there were only 20 according to Refinitiv data. This is also more than back in February 2020 when the pandemic stopped China’s shipping business altogether.
The shipping industry is still suffering from the 400-ship backlog that was caused by the Ever Given container ship being lodged in the Suez Canal back in March. The ship was freed in April, but Mearsk, the world’s largest shipping company said it could take months to recover from the delays.
“We were just beginning to see light at the end of the tunnel, but then unfortunately we rain into this situation in Yantian,” said Haupt.
COVID-19 has been the catalyst for many shipping industry issues as customer spending habits and demand has changed. The destabilization of the industry will only recover with time.
Story via Insider
