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KMR Blog: YICT Closure

Yantian International Container Terminal (YICT) in Shenzhen, one of China's busiest container ports, has imposed strict disinfection and quarantine measures due to COVID-19.


Following the restricted port operations results in port congestion, delayed processing, and massive delays in sea freight. Consequently, a large number of shipping companies do not serve that port now, but in some cases try to load containers via surrounding ports.



Background

YICT was temporarily closed at the end of May due to another COVID-19 occurrence among some port employees. The container yard was then closed to prevent further spread if the virus. The immediate consequence? A massive backlog of containers right up to the port's gates.

Even after the reopening of the port on May31, operations are faltering. More than 40 container ships were temporarily anchored off Yantian. With a daily volume of almost 25,000 TEU that the port could not handle, it is hardly surprising that the outcomes result in considerable challenges for logistics. The partial closure of the YICT, one of the busiest ports in the world, with about 100 ship calls per week, once again aggravates the already tense situation in the Asia-Europe sea freight traffic.


Implications on Global Trade

Major shipping companies have already announced that they will skip several ship calls at YICT on their scheduled routes or cancel ship departures. In doing so, 2M Alliance (Maersk and MSC) announced that 40 vessels will omit calls, as well as 16 calls of the Alliance (referring also to 11 vessels from CMA and CGM). The backlog of containers remains high, not least because work in YICT is currently still being carried out at 40%-45% of their total capacity. Thus it is likely that the pressure on the supply chains from southern China will further increase due to the numerous containers that are currently available which will impact:


Equipment - The blocked containers are driving a further decline in availability, which is impacting the export of goods


Alternative Ports of Loading - Many carriers have switched to the surrounded ports of Nansha and Shekou, in particular, which now also have to contend with widespread delays as a result of a capcity overload.


Truck Congestion - Due to quarantine measures imposed by the government, the availability of truck drivers is decreasing, which has now lead to widespread road congestion in the front if the southern Chinese ports.


Higher Freight Rates - Due to the ongoing container shortage, congestion surcharges made by shipping companies are becoming more frequent. Subsequently, increasing freight rates to continue to climb higher to cover these costs.


Longer Transport Time - Further delays are also to be expected in the transport time from China to Europe due to traffic-related delays in collecting and delivering containers.


Summary

Based on the massive after-effects of the backlog in China, current forecasts for the YICT will continue to impact the supply chain for another three to four months. The negative impact on global supply chains is already considered more serious than the outcomes of the Suez Canal blockage earlier this earlier. Even if ships can be gradually handled, truck capacities are currently in short supply. The picture on the roads at the moment is characterized by massive traffic jams of trucks loaded with exports.


While the situation may seem insurmountable, KMR Global is committed to its customers in providing exceptional customer service. To deal with the current challenges of sea freight, we at KMR Global, recommend a focus on long-term planning and placing bookings for the weeks and months to come as soon as possible to account for the delays occurring. If you have a time-critical shipment, we can offer several alternative options through air freight services. We will be happy to present you with a multitude of options to select from - even with short notice.

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