Reefer Shippers Urged to Reroute as Shanghai Lockdown Causes Backlogs

Shanghai port
Shanghai's terminals are running out of reefer plugs as imports pile up (file photo)

Published Apr 8, 2022 3:48 PM by The Maritime Executive

While Chinese officials continue to insist that the port of Shanghai is functioning, there are increasing reports of congestion even before city officials moved to further tighten restrictions and extend the lockdowns in the city of nearly 26 million people. In the latest sign of the backlog especially for imports, major shipping companies including CMA CGM and MSC are now suggesting that reefer customers reroute containers away from Shanghai.

Health authorities have recorded over 130,00 cases of a variant of COVID-19 in Shanghai since March 1, with the city setting new records over the past three days of more than 21,000 positive tests per day. Symptomatic cases are also on the rise with the health authorities saying that the number doubled to 824 on Friday.

In response to the growing number of cases, Shanghai which went into lockdown at the beginning of the week is extending the citywide stay home orders while increasing the restrictions on businesses permitted to continue to operate. By some reports, 90 percent of the trucking capacity serving the port is now stopped with restrictions having been expanded preventing most trucks from leaving the city. Since the beginning of the lockdown, drivers have been required to have negative COVID-19 tests to enter the port and have been limited in their routes and when they can travel.

“In consequence of the pandemic control management measures undertaken by the local authorities in Shanghai, we observe a massive impact on both trucking movements velocity and available trucking capacities,” CMA CGM warns customers in an April 8 advisory. “These factors have a major impact on import cargo that suffer drastically slower pick up time and therefore excessively stretched dwell time.”

The Shanghai International Port Group reported that it was using a closed-loop approach to reduce exposure during the current wave of the virus across the city. By some indications, the container port, which is the busiest in the world, is operating at only half capacity. While the restrictions on workers are permitted the terminals to continue to service ships, the lack of trucks means imports are piling up on the dock while any of the factories that have been able to continue to operate are having a hard time moving their goods to the ports.

CMA CGM is warning shippers that they are seeing “high stress on yard plug capacities.” They are now suggested to customers, “To prevent a potential situation whereby on last-minute your reefer shipment is denied for discharge due to limited plug capacities, it is highly recommended that cargo owners anticipate potential issues and identify re-rerouting options.” CMA CGM told customers that it will waive the change of destination (COD) administration fee for those customers who decide to COD inbound reefers from Shanghai to other alternative ports.

MSC is reporting that it is also experiencing “considerable congestion, resulting in low or, at times, no availability of plugs for reefer containers.” They are advising customers that MSC cannot discharge reefer containers at the designated port if there is no power source available. They also recommend rerouting, warning customers, “if the situation does not improve soon it may be necessary to abandon the voyage and advise you from where your container(s) may be collected.”

Other Chinese ports, so far, are reporting that they have been able to continue normal operations with little impact from Shanghai. Other cities across the country are, however, beginning to report that they are seeing new cases of the virus and stepping up their control measures. The Yantian terminal at Shenzhen port in southern China, Bloomberg reports, briefly halted operations on April 7 for two hours to “smooth out port operations.” Similarly, the Ningbo-Zhoushan Port Group said that operations are continuing normally, but today, Caxton is reporting that eight cases of the virus were found among container truck and freight drivers in the area around Ningbo.

The potential repercussions from the latest outbreak and China’s zero-tolerance policies are growing. Investment firm ING’s Chief Economist for Greater China, Iris Pang, Bloomberg reports wrote that if the Shanghai's lockdown continues throughout April, the city will suffer a six percent loss in GDP resulting in an overall two percent GDP loss for China. Other analysts are warning of the increasing chances of global impact if the lockdowns are stretched out further restricting the flow of goods and global trade.