Global Supply Chain Hit as China Impacted by Delta Covid, Flooding and Typhoons

China has travel and other restrictions to fight its latest delta COVID-19 outbreak. The outbreak is in its fifth week and involving more than a dozen cities.

China closed the world’s third-busiest port after a single worker tested positive for COVID-19. The Meidong Terminal processes 25% of the cargo that passes through the Ningbo-Zhoushan port.

There was a backlog of 40 container ships were anchored off the coast of Ningbo as of Thursday. Shipping operator CMA CGM said it is rerouting some of its ships to Shanghai, which is about 130 miles north of Ningbo, but Shanghai is already congested.

Freight costs from China to the U.S. rose to a record $20,000 per 40-foot box last month—a 500% increase on the cost in the same month last year. This means anything that is shipped in the container has a portion of the increased shipping cost.

China has reported 878 COVID-19 cases in the past two weeks—more than double the total recorded in July. Some 40 cities have reported clusters of the more contagious Delta variant, prompting new lockdowns and citywide COVID-19 testing campaigns.

Typhoons and flooding have also depressed container handling 10% across East China ports.

These problems impact the global supply chain. China’s factories supply many products and components needed for the world economy.

South Korea and Japan are also getting more COVID cases. The levels are low relative to the US, Mexico and Europe but they are triggering stronger restrictions.

Congestion and Delays at US Ports and With US Trucking

Mid-August is the early days of peak shipping season. There is nearly record number container ships anchored off California.

Port congestion is also building along the East Coast. There are double-digit container ships off of Georgia and growing numbers offshore of the Port of New York and New Jersey.

Last week there were 125 ships of all types (including tankers and cruise ships) either at berth or anchor in Los Angeles/Long Beach.

There are also labor supply issues for container handling in ports and for trucking.

SOURCES- Reutres, Fortune, Stripes
Written by Brian Wang,

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