The Yantian Port has been experiencing severe traffic obstruction and high yard occupancy since May 25, 2021, due to COVID-19 outbreaks among port workers. The suspension of exports will increase congestion, and the port may face significant challenges and delays in the coming weeks. The situation continues to deteriorate after more covid positive cases were reported in Shenzhen, where the Yantian port is situated.
Operations at YICT port are suspended until further notice by the government on the western area of the port. Meanwhile, it is reported that the container yard will be available only to vessels from May 31, 2021, to June 6, 2021, after the terminal confirms the reservations made for laden containers by trucking companies.
“Due to increasingly serious delays in vessel schedules, the container yard is now in high utilization rate, which seriously affects the efficiency of terminal operations. This also causes traffic congestion around the port area”.A YICT spokesperson
To ensure terminal safety and maintain the Shekou port’s service standards, covering the Chiwan Container Terminal, Mawan Container Terminal has updated the control measure. Shekou port has decided to accept vessels within an ETA of 5 days from June 1, 2021, at midnight. It has been reported that several ships will be omitting the Port of Yantian and Shekou to protect schedule reliability.
Spike in Ocean Rates
“The recent rise in covid positive cases in China has resulted in a shutdown that may add to the already record cost of shipping goods out of China. The delays have already resulted in pressurizing soaring shipping prices within China due to a lack of containers and increased export demand. These high shipping costs are just one factor that may contribute to an additional looming threat to global inflation.”Josh Brazil, VP Marketing
According to FBX, here’s how the port congestions affect ocean rates:
Asia-N. Europe Ocean valuations nailed 15% and $500 past the $10,000/FEU mark this week, as shippers also strengthen for early-month General Rate Increases that could drive prices up on all major lanes.
Interruptions due to a COVID outbreak at the Port of Yantian outside Shenzhen is the most advanced case of corona infections leading to port closures. With supply further reduced and demand for Chinese goods remaining at record highs, this will remain a notable driver of inflated freight rates.
- Asia-US West Coast prices grew 2% to $5,494/FEU. This rate is 236% higher compared to the same time last year.
- Asia-US East Coast costs also climbed 2% to $7,479/FEU and are 190% higher compared to valuations for this week last year.
The rates continue to climb not just because demand and volume are persistently at their peak but also because of vessel delays due to restricted volumes, which has reduced the capacity by tying up ships along with containers. Apart from the spike mentioned above, European ocean rates raised by 15% this week, according to The LoadStar.
It is expected that these challenges will affect sea freight and impact air freight, as well, due to the supply chains transferring shipments through different modes as they cannot afford to lose critical inventory stocks. According to reports, many loads have faced high rates ranging from $500-$1000 for handling and re-routing.
Due to the obstruction, the possibility looms that there will be additional blank sailings in June from Yantian to Hong Kong to the US west coast. Container capacity may be reduced by some 50%, and only a few carriers will be allowed to release premium shipping containers. However, carriers haven’t announced blank sailings yet, but blank sailings are possible if vessels fail to return from the US.
According to The Loadstar, for Asia-Europe trade lanes, the present obstruction in China has witnessed carriers announcing blank sailings from northern ports like Tianjin and Qingdao. Reportedly, The Alliance has already said on record that there will be nine blank sailings out of 35 departures in June.
Nevertheless, the loops operated under Ocean Alliance and 2M are more substantial, with only a few blank sailings required. The alliance has multiple loading ports, so if they must skip one, they still can compensate with another POL. This could be a helpful sign for importers from Europe following the overall deterioration in the Asia-Europe transits witnessed over the last three years.
Below provided is the list of vessels currently within the vicinity of the Port of Yantian:
|Vessel Name||Capacity (TEU)||ETA (based on AIS)|
|MP THE BELICHICK||5041||5/30/2021|
|WAN HAI 522||4300||5/30/2021|
|CSCL PACIFIC OCEAN||19000||5/30/2021|