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The global trade of goods continues to be disrupted. Picture: 123RF/DRAGANCHE
The global trade of goods continues to be disrupted. Picture: 123RF/DRAGANCHE

Optimism is growing that port delays and a trucking shortage in Shanghai are quickly abating, providing some relief to supply chains, though hurdles remain.

Traffic into the city is picking up, with logistics experts seeing activity returning to about 80% of levels seen before Shanghai’s Covid-19 lockdowns. The trucking situation in Shanghai could return to normal within the next one to two weeks, digital freight forwarder Flexport said. 

Shanghai’s port operations are also improving. Daily container throughput — a measure of the amount of cargo handled — is about 95% of normal levels, according to local media reports. Shipping delays have been reduced, with container vessels waiting 31 hours on average off Shanghai up to June 1, compared with 69 hours in late April, according to maritime data provider VesselsValue. 

Port and shipping shares rallied in early trading in China on Tuesday. Shanghai International Port Group gained as much as 2.3%, Rizhao Port jumped more than 6% and Guangzhou Port climbed the daily limit of 10%. Cosco Shipping rose as much as 4.7%.

While increasing levels of export containers heading into the city are being seen, the volume heading out of Shanghai remains muted, logistics information provider FourKites said.

FourKites’ customers had an average 52% more volume brought by truck and rail into Shanghai last week compared with May 20, with levels about 31% lower than March 12. Meanwhile, container volumes transported from Shanghai were 84% below March 12 levels.

Logistics providers are able to arrange trucking from other provinces to Shanghai, but there have been some cases of shippers in Zhejiang and Jiangsu rejecting deliveries made by drivers coming from Shanghai, according to Flexport. 

The situation in Shanghai — the site of the world’s largest port — is being followed closely after a two-month lockdown affected supply chains in China and globally as it shut down factories and caused a huge drop in truck traffic. The city is now officially out of lockdown, yet it will take a long time for production and trade to recover completely. 

The easing of port congestion in Shanghai is expected to unleash a wave of containers on the US west coast that could clog supply chains further. Shanghai’s situation is only one factor hampering global trade. Citigroup said in its June supply chains report that the global challenges look to be as acute as any time over the past two years.

“Supply chain pressures have proved to be more persistent, and apparently deep rooted, than we had expected even a few months ago,” Citi said in the report. “Given these realities, any hopes of near-term improvement in supply chain conditions have been shattered.”

Trucking activity in Shanghai is still far from returning to pre-pandemic levels of 2019, according to data from G7 Connect. 

Even as factories in the Shanghai area begin to exit closed-loop operations, some manufacturers are choosing to remain below full capacity, said Kathy Liu, director of global sales and marketing at Taiwanese freight forwarder and logistics specialist Dimerco Express.

Still, Dimerco said it has seen trucking activity recover to about 80% of pre-lockdown levels. Seko Logistics said last week it has seen a similar improvement, though it warned that higher costs and restrictions still in place for areas near Shanghai could hinder the recovery.

Seko said it hopes to see more improvements after truckers stopped working during the public holiday over the weekend.

More stories like this are available on bloomberg.com
Bloomberg

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