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Logistics Companies Scramble Amid Shanghai Covid Lockdowns

Logistics companies warned of higher transportation costs and more delays with the city of Shanghai in the midst of a two-phase lockdown amid an already constrained supply chain still reeling from recently lifted quarantines in other parts of China.

The Port of Shanghai and Shanghai Pudong International Airport remain open, but both their operations are impacted due to the lockdown’s impact on workers and road restrictions.

The city saw more than 2,600 new Covid cases over the weekend, prompting the government to announce a lockdown of its residents in two phases as the entire population there undergoes testing. The first shelter-in-place order began Monday for the eastern portion of the city, while the western half will see a stay-at-home order between April 1 through April 5.

“This could be yet another potential setback for exports from China, in light of disruptions triggered by previous Covid-related shutdowns and the war in Ukraine. Industry analysts predict that, while this could send demand and spot rates down in the short term, it could create upward pressure later,” Flexport global head of content Trips Reddy said in an update on China this week.

The country has seen a wave of Covid cases, sparking a patchwork of temporary lockdowns this month in places such as Shenzhen, Dongguan, Jilin and Langfang.

“Local lockdowns and other quarantine measures in response to coronavirus outbreaks in Shenzhen, Shanghai, Qingdao and other cities are creating transport and supply chain bottlenecks even as ports and terminals remain operational,” Maersk said in a client advisory Wednesday.

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The company said it is not calling at Chiwan Container Terminal and Yantian International Container Terminal at the Port of Shenzhen as it forecasted increasing wait times there, and notified customers of delays as it moves cargo to other vessels.

Maersk also said it’s expecting a 20 percent decline in trucking services from Shenzhen and other cities due to travel restrictions and driver nucleic acid testing requirements, “leading to longer delivery times and higher transport costs.”

Seko Logistics warned customers it expects a “sharp increase” in air freights, adding, “We have already received some sky-high offers” to Europe, along with a rise in trucking costs.

Normal Global Logistics, which has offices in Shanghai and other parts of the country, said in an advisory Tuesday its staff is monitoring the situation.

Any cargo coming by truck outside of Shanghai is unable to carry product to either the port or airport, where Norman Global said Cargolux Airlines has cancelled flights through at least this week. The company also warned many depots and warehouses at the port are closed.

“Extended lockdowns may mean factories missing delivery schedules, which is why we recommend checking with your vendors to clarify the status of your orders,” the logistics firm advised customers.

Geodis said container freight station services (CFS), which are used to consolidate or unload imports and exports, have been halted at the airport and is telling customers it has an alternate CFS in Wuxi, an eastern China city near Shanghai, that is operational and handling cargo impacted by the lockdown.

At the ports and surrounding facilities, Geodis said full container load trucks continue to move, while less than container load truck services are stopped. The company said it’s working with shipping lines on alternate solutions to pickup and deliver containers.

“Regarding movements between south China—Hong Kong, while the lockdown was lifted last week, the market still experiences a dramatic shortage of drivers willing to move cross-border cargo, further extending delivery times. Moving via barge remains the most predictable in terms of delivery timing in Hong Kong,” Geodis said.