Massive Delays At China Ports After COVID-19 Outbreak, Global Supply Chains Take A Hit

Limping from COVID-19-related disruptions and the blockage of the Suez Canal, the global economy is faced with a crippling challenge after a major shipping hub in China imposed restrictions to prevent the spread of a more potent strain of the coronavirus.

Authorities have closed busy districts and businesses in the Guangdong province after the Delta variant was detected in late May. Port terminals were forced to operate with limited workers on site, CNBC reported.

Reuters reported that the ports in Guangdong, including Shekou, Nansha, Chiwan, and Yantian, have issued notices that effectively bans vessels without prior reservations. The ports will require bookings for export-bound containers within three to seven days before the arrival of the ships.

Trading schedules are expected to be delayed anew and shipping costs to rise following a congestion in Southern China ports.

Guangdong accounts for about 24 percent of China’s total exports. The province is home to the port cities of Shenzhen and Guangzhou, the world’s third and fifth largest ports in terms of container volume.

“The turmoil in Shenzhen and Guangzhou is absolutely huge, and that alone will have an unprecedented impact on the supply chain,” Brian Glick, founder and CEO of supply chain integration platform Chain.io, told CNBC.

Glick added that China’s shipping crisis along with the challenges that global supply chains has already faced this year puts the shipping industry in “absolutely unchartered waters”.

Analysts said the situation has led to an increase in wait times for berths and higher shipping costs.

First identified in India, the Delta variant of the coronavirus has infected more than 100 cases in Guangdong. Government-imposed lockdowns have slowed down operating schedules at the ports.