Ship congestion in China raises concerns about supply bottlenecks

Renewed traffic jams outside a major container transshipment port in China threaten to exacerbate supply bottlenecks for the German economy.

“The congestion is quickly spreading to other ports as soon as ships start avoiding the affected ports,” trade expert Vincent Stamer of the Kiel Institute for the World Economy (IfW) told Reuters on Friday. “This will undoubtedly also lead to further delivery delays – including for Germany.

The Meidong container terminal in eastern Ningbo suspended operations on Wednesday after a corona fall was discovered. “A prolonged closure could develop a dynamic that would put additional strain on already strained supply chains and flows of goods,” warned Riccardo Kurto, the China representative of the German Association of Materials Management, Purchasing, and Logistics (BME). Ports and shipping companies are now diverting ships. At the same time, the nearby port of Shanghai is more congested than it has been in at least three years. Currently, 37 ships are waiting to call at Ningbo. Outside Shanghai, 26 ships are jammed, data from information provider Refinitiv show.

Tighter restrictions to curb the recent Corona outbreak are now gripping more sectors of the country’s economy. The highly contagious Delta variant has already been detected in more than 12 cities since late July. Ningbo Zhoushan is China’s second-largest container port after Shanghai and was formed years ago by the merger of the ports of Ningbo and Zhoushan.

According to the German economy, the corona-related temporary closure of the Chinese commercial port of Yantian in May and June has more serious consequences for global supply chains and flows of goods than the shipwreck in the Suez Canal before. For the technology and electronics sectors, in particular, the delays in container loading that occurred in the meantime posed a problem, as the BME found out in a survey of its members. Supply chain disruption is a serious problem for Germany as a trading nation. Nearly 64 percent of industrial companies complained of bottlenecks in intermediate products such as chips in the July survey by the Ifo Institute.