Severe bottlenecks that have snarled major ports in the U.S. and Europe through the pandemic are now disrupting operations at a key export hub in China that could last until the end of this month and lead to further rise in ocean freight rates.
Yantian International Container Terminals, an operator of terminals at Shenzhen port, was partially closed late last month for a few days after some dockworkers were among those confirmed with Covid amid an outbreak in Guangdong Province. The facility is facing challenges due to efforts by the local authorities to disinfect and enforce quarantine measures that have led to labor shortages.The disruption at the world’s fourth-busiest container port is putting stress on an already fragile global supply chain. While ships are calling at Yantian, port activities there and nearby facilities remain restricted. Vessels are spending as long as five days at port recently, as containers for exports are piled high at yards stretched to maximum capacity.
“The worsening South China port congestion problem is becoming the latest major disruptor and supply bottleneck for the container shipping sector,” Andrew Lee, an analyst at Jefferies in Hong Kong, said in a report. “This, we expect, will lead to container rates hitting new historical highs in the near-term.”
Maersk, the world’s biggest container line, said that current productivity at Yantian terminals is about 30% of normal levels. To avoid delays, the company and other shipping companies are diverting some of their vessels to other terminals in Shenzhen or skipping the port.
Higher shipping rates may follow. The weekly
China Containerized Freight Index for exports jumped to a record on Friday. Spot levies to move a 40-foot container to Rotterdam from Shanghai rose 2.8% to $10,462 on June 3, while those to Los Angeles from Shanghai climbed 3.7% to $5,952, according to the Drewry World Container Index.— Kyunghee Park in Singapore
Charted Territory
Women Truckers
The number of women employed in truck transportation hit a record in April
Source: U.S. Bureau of Labor Statistics
The number of American women employed in truck transportation reached a record high in April, as the industry tries to fill vacancies that are straining capacity. That’s according to U.S. government figures released Friday that showed U.S. job growth picked up in May — along with worker pay — and the unemployment rate fell. Some of the U.S. jobs figures, like the women in trucking data, are released with a one-month lag.
Today’s Must Reads
- Trade boom | China’s exports continued to surge in May, fueled by strong global demand as more economies around the world opened up. Imports soared, boosted by rising commodity prices.
- Slowing recovery | German manufacturers unexpectedly saw demand decline in April, signaling that supply shortages and higher prices are undercutting the country’s economic recovery.
- Tax deal | The Group of Seven secured a landmark deal that could help countries collect more taxes from big companies and enable governments to impose levies on U.S. tech giants such as Amazon and Facebook.
- Roads and bridges | The biggest threat to President Joe Biden’s vision of energizing the U.S. economy with the largest infrastructure program in decades may not be its challenging path through Congress, but a dire shortage of everything from workers to cement mills.
- Out of kilter | The trade relationship between the world’s two largest economies has “significant imbalance” and the Biden administration is committed to leveling it, according to the U.S. trade representative. Separately, Boeing CEO Dave Calhoun warned that a prolonged trade deadlock between the U.S. and China threatens the comeback of its 737 Max and, ultimately, the company’s longstanding role as a U.S. industrial champion.
- Impossible situation | Deteriorating relations, including trade-related friction, have made normal operations for Australian exporters in China “ impossible,” according to a report from a leading network of business interests.
- Brexit mess | The U.K. government urged the European Union to show a “common-sense” approach to their post-Brexit future ahead of a key meeting this week, where the two sides will seek solutions to prevent further unrest in Northern Ireland.
- Pakistan boost | The country will cut taxes on imports of raw materials to spur manufacturing and overall economic growth. Customs duties on input items needed by pharmaceutical, chemical, engineering and food processing industries will be reduced by 3% to 10%.
- Up cycle | Customers crowding into U.S. bike shops are often walking out empty-handed — or with a bike whose price has repeatedly gone up since last year. A hobby that’s enjoying a new wave of popularity illustrates the inflationary pressures rippling through the wider U.S. economy.
On the Bloomberg Terminal
- Carmaker woes | The surge in production costs due to rising commodity prices and a global chip shortage may limit automakers’ post-Covid profit recovery, according to Bloomberg Intelligence. Luxury marques such as BMW and Mercedes can mitigate margin pressure through price hikes, but mass-market brands, whose customers are more price-sensitive, may need to bear higher costs on their own.
- Vaccine IP waiver | A revised proposal to waive international intellectual property protections on Covid-19 vaccines shows good faith from developing countries seeking to ramp up immunization efforts, but it may not be enough to persuade holdout nations to come on board, legal and policy observers say.
- Use the AHOY function to track global commodities trade flows.
- Click HERE for automated stories about supply chains.
- See BNEF for BloombergNEF’s analysis of clean energy, advanced transport, digital industry, innovative materials, and commodities.
- Click VRUS on the terminal for news and data on the coronavirus and here for maps and charts.
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— With assistance by Ana Monteiro
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