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Shanghai trucking shortage gradually eases but hurdles remai

2022-06-09 17:45

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Shanghai trucking shortage gradually eases but hurdles remain

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The Waigaoqiao Container Port in Shanghai on Friday BLOOMBERG

Optimism is growing that port delays and a trucking shortage in Shanghai are quickly abating, providing some relief to supply chains, though major hurdles remain.

Traffic into the city is picking up, with some logistics experts seeing activity returning to about 80% of levels seen before Shanghais COVID-19 lockdowns. The trucking situation in Shanghai could return to normal within the next one to two weeks, digital freight forwarder Flexport Inc. said in an emailed reply to queries.

Shanghais port operations are also improving. Daily container throughput a measure of the amount of cargo handled is about 95% of normal levels, according to local media reports. Shipping delays have been significantly reduced, with container vessels waiting 31 hours on average off Shanghai as of June 1, compared with 69 hours in late April, according to maritime data provider VesselsValue.

Port and shipping shares rallied in early trading in China on Tuesday. Shanghai International Port Group Co. gained as much as 2.3%, Rizhao Port Co. jumped more than 6% and Guangzhou Port Co. climbed the daily limit of 10%. Cosco Shipping Holdings Co. rose as much as 4.7%.

More progress is needed. While increasing levels of export containers heading into the city are finally being seen, the volume heading out of Shanghai remains muted, logistics information provider FourKites said in an email on Friday.

FourKites customers had an average 52% more volume brought by truck and rail into Shanghai last week compared with May 20, with levels about 31% lower than March 12. Meanwhile, container volumes transported from Shanghai were 84% below March 12 levels.

Logistics providers are able to arrange trucking from other provinces to Shanghai, but there have been some cases of shippers in Zhejiang and Jiangsu rejecting deliveries made by drivers coming from Shanghai, according to Flexport.

The situation in Shanghai the site of the worlds largest port is being followed closely after a two-month lockdown impacted supply chains both within China and globally as it shut down factories and caused a massive drop in truck traffic. The city is now officially out of lockdown, yet it will take a long time for production and trade to recover completely.

The easing of port congestion in Shanghai is expected to unleash a wave of containers on the U.S. West Coast that could clog supply chains further. And Shanghais situation is only one factor hampering global trade. Citigroup said in its June supply-chains report that the global challenges look to be as acute as any time over the past two years.

Supply-chain pressures have proved to be more persistent, and apparently deep rooted, than we had expected even a few months ago, Citi said in the report. Given these realities, any hopes of near-term improvement in supply-chain conditions have been shattered.

Trucking activity in Shanghai is still far from returning to pre-pandemic levels of 2019, according to data from G7 Connect.

Even as factories in the Shanghai area begin to exit closed-loop operations, some manufacturers are choosing to remain below full capacity, said Kathy Liu, director of global sales and marketing at Taiwanese freight forwarder and logistics specialist Dimerco Express Corp.

Still, Dimerco said it has seen trucking activity recover to about 80% of pre-lockdown levels. Seko Logistics Ltd. said last week its seen a similar improvement, though it warned that higher costs and restrictions still in place for areas near Shanghai could hinder the recovery.

Seko said it hopes to see more improvements after truckers stopped working during the public holiday over the weekend.

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