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Asia Pacific Container Logistics Update May 2022: China’s new Covid-19 outbreaks and Ukraine conflict impact logistics

Today’s global supply chain ecosystems have been built and fine-tuned over many years. No one can go through a crisis without being disrupted. The new Covid-19 pandemic-related shutdowns, restrictions in China and the Russia-Ukraine conflicts are the latest events to challenge logistics in the Asia Pacific.

Yan Jing Fu, 11 May 2022

Now, let’s take a look at our insights into these two uncertainties which probably impact your business most these days. Read on to get the latest information.

Covid-19 impact on China and logistics

China is suffering from another wave of Covid-19 outbreaks. The infection has been spreading in major cities, and the financial capital Shanghai has been most impacted since late March. Millions of Shanghai residents have been confined to their homes, with anyone testing positive being sent to quarantine centres.

Throughout the pandemic, China has stuck to a strict Covid-19 zero-tolerance policy that uses lockdowns, mass testing, quarantines, and border closures to contain the outbreak.

How is this new wave of Covid-19 affecting global trade?

  1. Creating big concerns for the global supply chain recovery: The pandemic has revealed how lean the supply chain has become, with even what some might call small disruptions in China having effects worldwide. According to a report from Fortune in April, one in five container ships is now stuck at ports globally, with a close 30% of them waiting outside of the Chinese ports. Also, as per the figures released by China Ports and Harbors Association, the container volume at eight major Chinese ports such as Shanghai, and Shenzhen slightly increased by 0.7% year on year in early April. In addition, factory closures in Shanghai and neighbouring cities could add to the disruptions to supply chains as well. In essence, as one of the largest import and export countries, China’s battle with Covid-19 impacts the Asia Pacific supply chain from all dimensions.

  2. Shortened trucking capacity, increased delivery time and transport costs: Local lockdowns and quarantine measures lead to trucking capacity shortage. Currently, we are seeing a drop in trucking services between Shenzhen and nearby cities due to more stringent pandemic controls, including the requirement that drivers show a recent negative Covid-19 Nucleic Acid Test. As a result, it causes longer delivery times and higher transport costs.

  3. Affecting first-and-last mile operations: Domestic railway services have not been impacted too much, but we advise you to plan in advance, as the anti-epidemic policy primarily affects first-and-last mile operations.

In affected areas such as Shanghai, the intracity transportation capacity has been limited. With the licenses issued by local authorities, the rest of the capacity is used to secure residents’ daily life essentials. However, we are seeing positive changes and recovery is happening recently.

What are we doing to handle the challenging situation in China?

In light of the ongoing lockdown situation in Shanghai, we are providing multi-modal services via barge and rail as alternative solutions between Shanghai and nearby cities. We also offer a package that includes several useful items:

  • free change of destination on import cargo into Shanghai port with an ETA of April 1st to 15th;

  • free destination and demurrage on cancelled export shipments from Shanghai with an ETD of March 28th to April 15th

  • free amendment or cancellation for shipment exported from or imported into Shanghai, with an ETD April 1st to 15th for export, and an ETA of the same dates.

We continue to closely monitor the situations affecting China to optimize our logistics services, and you can reach out to us for assistance.

The Impact of the Ukraine incident

The Russia-Ukraine conflict has created uncertainty in the financial market and global logistics. We have compiled some relevant key facts for logistics below.

  • Energy price increased- The imposition of sanctions by governments on Russia coupled with changeable energy prices is likely to have a significantly negative impact, adding to inflationary pressures. As reported by BBC, almost two weeks after the conflict happened, the petrol prices reached a high record. It is the highest level in 14 years.

  • Trade volume decrease- High energy costs may lower consumer consumption and eventually impact global trade flows in a negative way. Apart from the direct impact of loss on volumes in Russian trade, we expect a complex redirection of volumes to other regions.

  • Port congestions continue - Restrictions and stringent checks are happening in Northern Europe, while the ports in European keep suffering from congestion. European countries contribute a lot to commodities exportation. The more shipments piled up in the port, the more influences have on the commodities’ needs and selling price. Consequently, the immediate effect for Asia Pacific customers is cargo delays and a rise in cost.

As the conflict is continuing, we currently suspend bookings to/from Russia, Ukraine, and Belarus. If you need further information, please get in touch with our Twillers to get more information.

Get more insights on container logistics in the Asia Pacific

For more insights and updates, you can head to our Knowledge Hub. Take a look and you can get the latest industry outlooks to better plan your business.

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