Traffic Jam at World’s Fourth-Largest Port Disrupts Trade Flow

Summary

The full reopen­ing of the Yantian port in China on June 24 may not pro­vide imme­di­ate relief to the global sup­ply chain, with experts pre­dict­ing last­ing effects into next year due to a sig­nif­i­cant back­log of con­tainer ships. The clo­sure of the port due to a Covid-19 out­break in May led to a dis­rup­tion that sur­passed the impact of the Suez Canal block­age, caus­ing a short­age of ves­sel capac­ity and poten­tial long-term reper­cus­sions on global trade.

The full reopen­ing of the major port in Yantian, China, on June 24 comes as cold com­fort for the global sup­ply chain, with some pre­dict­ing the after­ef­fects could last into next year.

New data released on July 5 by the Kiel Trade Indicator, which ana­lyzes the flow of trade among 75 coun­tries, reported: ​“almost five per­cent of all con­tainer ship capac­i­ties” are at this time ​“tied up by traf­fic jams” at Yantian. This was ​“more than in the first wave [of the Covid-19 pan­demic],” it was fur­ther noted.

The dis­rup­tion at Yantian International Container Terminal, the world’s fourth-largest con­tainer port, started with a par­tial clo­sure in late May. This came about when five work­ers in the port tested pos­i­tive for Covid-19 dur­ing an out­break in the province.

Due to the scope of the out­break in Guangdong province and its vul­ner­a­bil­ity as a major entry point for vis­i­tors and cargo, the port only fully re-opened a month later.

“With an open port, you now need to deal with the full force of the nor­mal cargo flow, and then the back­log on top of it,” said Lars Jensen, the CEO of the Danish-based ship­ping com­pany Vespucci Maritime. ​“In this respect, I expect full nor­mal­iza­tion to take a cou­ple of months.”

“There is also a capac­ity short­age on ves­sels out of Asia,” Jensen added. ​“This means that tak­ing extra cargo to han­dle the back­log from Yantian will lead to a reduc­tion of avail­able capac­ity out of other ports in Asia — and hence the prob­lem will be felt across the mar­ket in the com­ing weeks. Realistically the impact could be felt well into 2022.”

Just two weeks into the port clo­sure, Jensen noted that the clo­sure dis­rupted more con­tain­ers than those affected by the Suez Canal block­age in late March.

At the time, Jensen explained dur­ing the first 14 days of the Yantian dis­rup­tion, the port was unable to han­dle 357,000 20-foot equiv­a­lent units (TEU).

On the other hand, the Suez Canal block­age would have dis­rupted 330,000 TEU if it had con­tin­ued for the same period. Moreover, the Yantian clo­sure lasted two weeks longer than the Suez Canal block­age.

When he released these fig­ures, Jensen said shar­ing these ball­park fig­ures demon­strate ship­pers should not dis­miss the extent of the expected rip­ple effects.

Weighing in on the mat­ter, senior man­ager of con­tainer research at London-based Drewry Shipping Consultants Simon Heany said ​“the sit­u­a­tion at Yantian has exac­er­bated exist­ing global sup­ply chain dis­rup­tion, caus­ing more bot­tle­necks in neigh­bor­ing ports and ter­mi­nals.”

“This has delayed the much-needed improve­ment in port pro­duc­tiv­ity required to han­dle the surge in con­tainer traf­fic seen from the sec­ond half of 2020,” he added.

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