Months of delivery delays are to be expected.

Supply chain conditions have been volatile since the start of the COVID-19 pandemic, but the problem is worsening, particularly with the lockdown in Shanghai since late March. It also appears that another lockdown is taking place in China. It has also been reported that the number of coronavirus cases has increased from Beijing from late April. According to the local press, the local government has tightened the measures again and ordered the closure of home offices and companies. Local residents feared even stricter regulations. Another lockdown on a similar scale to Shanghai would in this case affect around 22 million people, disrupting the global supply chain for months and increasing already high inflationary pressures in Project 44 supply chain companies.

This is evidenced by data analysis of the blockade in Shanghai. On the other hand, the dwell time of imported containers in port increased by 237%, rising from 4.6 on the first day of the blockade to more than two weeks just before deregulation on April 22. The container could not be picked up quickly enough by truck from the port and thus blocked the available storage space.

Overloaded ports, not only in Hamburg.

Project44 data also shows increasing delivery delays, meaning the difference between originally expected arrival time and actual arrival time of shipments at ports has increased. This affects the major European ports of Antwerp, Hamburg and Valencia as well as the US West Coast ports of Long Beach, Tacoma and Seattle. „With an increase in average transit times to 65 days to Hamburg and over 41 days to Long Beach, delivery delays from Shanghai will become even more noticeable in the coming weeks,“ the supply chain company said. Even when the Shanghai manufacturing plants resume production, the delay will extend well into the summer months.

Crisis in the supply chain throughout the year?

The industrial insurer Allianz AGCS has confirmed these forecasts. According to risk advisor Anastasias Leonberg, the return to normal business in Shanghai could take months. „I don’t think this will be resolved in the foreseeable future,“ said dpa/onvista. James McKenna, chairman of the Pacific Maritime Association (PMA), expects problems in US ports to continue. “We never believe that the supply chain crisis is over. In fact, we plan to keep it that way throughout the year. The volume of orders to be processed in China is large. “

Traffic jams like on freeways

After the closures, there were traffic jams in the North Sea and, among other things, the logistics company DSV warned of delays in sea freight handling in Hamburg at the end of April with a standby time of up to 21 days. The whole situation is like a traffic jam on a freeway, as Professor Christian Kille from the German Logistics Association (BVL) explains: „Even if traffic congestion in Shanghai eases and most factories in China are standing still, when the country is about to shut down, it will be months take time for the supply chain to normalize. It’s like the traffic jams on the freeways are spreading and piling up despite the real reason. The traffic jam is long gone,“ he said last week at a BVL meeting in Duisburg. This would initially shift the traffic jams to the European ports „because they cannot cope with the rush“.

Stagnant exports from China

According to the authorities, the production plant can operate normally, but delays are expected. Many employees are still in quarantine, import problems are exacerbating parts shortages, and logistics remain problematic. In factories that produce for Apple, corona measures have recently even led to riots. The situation has already affected China’s commodity exports: April export growth was 3.9%, the slowest since June 2020, China Customs reported recently, according to Tagesschau. The effects are particularly pronounced in German business, where China’s exports to Germany fell „unusually sharply“ by 9% and German goods imports to China fell by 9.8%. The Institute for the World Economy observed stagnation in Chinese imports and exports in April. „The Shanghai blockade has stunted China’s export growth, but the drop in trade appears to be limited to Shanghai’s ports,“ said Vincent Stammer, head of the Kiel Trade Index. But he was also optimistic. „The gap in commodity exports compared to other ports in China has settled at around 25 percent, but it also means that despite the blockade, the bulk of all commodities will leave the port.“ This bodes well for the global supply chain. „