One of the world’s busiest container ports fully reopened today (August 25), two weeks after a Covid-19 outbreak triggered a partial closure, piling further pressure on stressed supply chains.

The Meishan section of China’s Ningbo-Zhoushan port, south of Shanghai, was shut down on August 11 after an employee tested positive for coronavirus. China has pursued an aggressive zero tolerance approach to combating the virus.

Local officials confirmed at a press conference this morning that operations at Meishan have resumed with stringent health protocols in place, Chinese state media reported.

The facility is the world’s third-busiest container port, according to Lloyd’s List, and around a quarter of its capacity flows through the Meishan section, estimate security consultants GardaWorld.

Major shipping lines redirected vessels away from Ningbo to other ports in the region during the closure. Ningbo is also a major conduit for intra-China seaborne freight.

Delays at Ningbo are expected to further pinch container availability and lead to congestion at other Asian ports while the backlog is cleared, according to marketplace Container xChange.

A global shortage of containers and vessel capacity, exacerbated by sporadic port closures in Asia due to coronavirus outbreaks, has sent shipping prices skyrocketing and stoked fears of higher inflation and impacts on SME traders.

A spike in average container prices at the Chinese port of Yantian – from US$5,515 in June to US$15,336 in August – following a similar coronavirus outbreak suggests the Ningbo slowdown will also lead to higher costs, Container xChange says in a statement.

“Whether we see a further spike in container prices at Ningbo will probably be determined by how much cargo was disrupted at the port and whether we see additional shutdowns later this month,” says Johannes Schlingmeier, the company’s CEO.

“Even if there are no additional closures it is likely that container prices will rise on lower availability in the coming weeks due to the lag between liner schedule disruption and container availability and pricing.”

Operations at some ports and manufacturing zones in Vietnam have also been hampered by coronavirus outbreaks, propelling container prices higher.

The detection of the virus among staff at a cargo facility at Shanghai’s Pudong International Airport late last week has also caused delays in airborne freight, according to freight companies. Like Ningbo port, Pudong serves the sprawling manufacturing region around the Yangtze River delta.

Tech to the rescue?

Companies offering supply chain and freight management solutions have leapt on the disruptions in China to advocate for greater adoption of innovative monitoring and risk mitigation strategies.

“While major disruption events may not be entirely mitigated, it is possible to significantly minimise disruption through robust scenario mapping and continuity planning,” says Alan Laing, managing director for the UK and Ireland at IFS, an enterprise software provider.

Technology like digital twins, which companies can use to digitally replicate assets or entire supply chains, can be incorporated into supply chain management software “to understand what level of goods throughput a logistics hub can maintain on a skeleton staff, if large numbers are unable to work or required to self-isolate”, Laing tells GTR.

Christoph Gugelmann, co-founder of trade finance distribution platform Tradeteq, claims “widespread, rapid adoption” of tools such as artificial intelligence “will help drive a change in global trade, making the supply chain ecosystem more responsive, agile and efficient”.

“Perhaps a few decades ago, businesses had no choice but to soak up the losses,” he tells GTR. “But advances in technology and the availability of large quantities of data means companies can be alerted to potential disruptions and react quicker than ever. This is a gamechanger for businesses.”

Tradeteq says its AI tools can provide companies with an “early warning sign” in cases such as a supplier with a cash flow problem, or when a weather event disrupts manufacturing.

Uncertainty set to continue

Port congestion is also growing in the US and freight providers say it is difficult to predict when supply chains are likely to become more stable.

As many as 38 ships are currently waiting at anchor off the port of Los Angeles/Long Beach, according to the Marine Exchange of Southern California, nearing highs last seen during major congestion in February.

“All [Los Angeles/Long Beach] terminals remain extremely congested and [are] evaluating a reduction on their window for export cargo acceptance from four to three days,” an operational update from shipping company Hapag-Lloyd says.

Capacity constraints are expected to bedevil the market for some time. Surging container supply is still unable to keep pace with demand, which is at its highest in over a decade, according to an August 23 market update from Danish shipping giant Maersk.

Much of the supply chain crunch is also down to a rapid resupply of inventories after the dramatic slump of 2020. “The manufacturing orders to inventories index hit the highest level in June since 2010 indicating continued restocking”, while in a global index of export orders in the same month also climbed to its highest level since 2010, Maersk notes.

“Uncertainties over the easing of capacity constraints, equipment shortages and port congestions make it challenging to predict when the disruptions and imbalance in demand and supply will normalise.”