(by Tyler Durden | Zero Hedge) – A parking lot of vessels are waiting outside China’s largest ports as the country experiences the biggest COVID-19 outbreak in two years continues to spread amid extended lockdowns in Shanghai.
Vessels carrying raw materials have increased over the last month as Shanghai’s 25 million people have been placed on lockdown, as new daily infections jumped to 26,000 on Sunday. The lockdown has shuttered factories, disrupted logistical networks, and reduced operational capacity at ports.
Shipping data via Bloomberg shows 222 bulk carriers waiting off Shanghai, China’s biggest port, 15% higher than a month ago. At the Port of Ningbo-Zhoushan, there were 134 carriers, or about a 1% increase versus last month, while further north at ports of Rizhao, Dongjiakou, and Qingdao recorded a 33% jump to 121 vessels. Adding to the congestion, nearly 200 container ships were sitting in Shanghai’s combined anchorage area with Ningbo, a 17% increase from a month ago.
Bloomberg spoke with vessel owners and traders who said capacity at the Port of Shanghai has reduced due to a shortage of dock workers. Containers are piling up at the port, as the lockdown in the city has led to a shortage of trucks needed to clear imports. It’s also disrupted business operations in the city.
The cooling of transpacific shipping rates directly results from the lockdown in Shanghai.
A 40-foot container from Shanghai to Los Angeles slumped 3.2%, from $9,112 a week ago to $8,824 this week. The benchmark transpacific route is down more than 30% from the September peak of $12,424 but still five times higher than in April 2019.
What happens next, when China reopens, a giant backlog of Chinese products will need to be shipped to the US and congest US West Coast ports (again).