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Shanghai’s Longer Lockdown Spells ‘Serious Disruption’

Measures to stop the spread of Covid-19 in Shanghai have led to a prolonged city-wide lockdown encompassing some 26 million people as logistics firms look to help clients navigate the latest supply chain snarl.

The city last week originally announced a two-phased approach to quarantining residents, with the first running through April 1. The second lockdown was originally set to lift Tuesday, but the entire city now remains in quarantine as government officials await Covid-19 nucleic acid test results.

Supply chain and logistics executives are now scrambling to mitigate impacts across transportation modes.

“The ongoing lockdowns have put severe strains on the local and international supply chains interacting with the greater Shanghai area by air, sea and ground,” Ron Greene, vice president of business development at risk management and supply chain software firm Overhaul, told Sourcing Journal. “Trucking and port operations in the area are operating at much lower capacity. Inbound ships are being diverted to other ports as companies are trying to divert outbound freight to alternate ports, local factories are operating at reduced capacity or closed altogether and air freight operations at Shanghai Pudong Airport are essentially shut down due to flight cancellations amid employees being forced to stay at home.”

Greene went on to say the company is warning customers of delays and encouraging them to connect with local partner companies for the latest in updates about the status of operations.

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“Right now, there is no timetable for normal operations to open back up, but most expect at least another week of lockdowns and a further week of ramp-up as operations begin to resume,” Greene said.

Supply chain data company Everstream Analytics is alerting clients the current lockdown is scheduled to last until April 15.

“The de-facto lockdown extension is likely to continue the serious disruption to trucking in, out and within the city, causing a drop in the availability of goods and port output,” Everstream said.

The company’s data found some shipping companies are seeing a 30 percent decline in efficiency, driven by the truck shortage at the port. Chinese exports are now projected to fall about 30 percent over the next two weeks, according to Everstream. Meanwhile, the analytics firm said Port of Shanghai wait times are between one and two days and ships in queue at the port have increased over the past two weeks by more than five times to more than 300 vessels. Everstream pointed out most of those ships are oil tankers and dry bulk cargo, the latter being raw materials not packed in containers.

Operations at the port have continued throughout the start of the quarantines with 24/7 operations, but a shortage of labor remains the sticking point.

Houston-based Crane Worldwide Logistics aimed to quell ocean freight concerns in a Tuesday update to customers.

“There is a rumor in the market that Shanghai port is severely congested. This is incorrect. Shanghai port is mainly for container vessels. The … 300-plus [queued] vessels are mainly dry and break bulk vessels and oil tankers, the majority of which are destined for Ningbo and Zhoushan port, not Shanghai,” Crane said in its advisory. “For now, Shanghai port is still operating 24/7. Though the port is busy, container vessels’ average waiting time for berthing is less than 24 hours.”