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Lockdowns in major Chinese cities including Shanghai, its most populous and home to the world’s busiest port, has crippled transportation and logistics across the country and Beijing’s “zero-tolerance” COVID policy continues to wreak havoc on the nation’s economy.
At least 200 million people in 23 cities are under full or partial quarantine, according to Japanese bank Nomura.
“These figures could significantly underestimate the full impact, as many other cities have been mass testing district by district and mobility has been significantly restricted in most parts of China,” Ting Lu, Nomura’s chief economist for China, told the Financial Times.
“Many of the entry and exit points between provinces are blocked and there has not been a coordinated effort between provincial governments to ease the supply chain crunch,” Loomis Sayles analyst Bo Zhuang said to the FT.
Shanghai’s Pudong airport is operating at 3 percent of capacity, allowing flights only for medicine and other essential goods.
Booking trucking services is virtually impossible, Mads Ravn [sic] vice-president of freight broker DSV, told the FT.
“It’s affecting every commodity you can think of,” he said. “It will have a global effect on almost every trade.”
In late March, ocean shipper Maersk warned that the lockdown would cut trucking trips in and out of Shanghai by 30 percent. However, that forecast was based on a previous plan to cleave the city in two and stagger a nine-day lockdown between the two halves.
Since then, the entire city has been shut down indefinitely.
Freight traffic through Shanghai’s port has fallen by a third, data service FourKites said.
“Once Shanghai reopens, it’s déja vu of the story we’ve seen,” CEO Lars Jensen of consulting firm Vespucci Maritime, said in an FT interview. “There will be a surge of volume and upward pressure on spot [freight] rates.”
On 6 April, the China Caixin service managers purchasing index reflected its worst month-over-month slide in March since early 2020 at the height of China’s first COVID bout.
TRENDPOST: China has not learned a key lesson of the COVID War: isolate the vulnerable, make masks and vaccines available to those who want them, and keep schools, businesses, and the economy open.
As we have greatly detailed, the vast majority of people who suffered the worst, or died, of COVID infections either were dramatically overweight or had underlying health conditions.
Those people can be identified, sequestered in their homes, and served by community agencies until the danger has passed.
TREND FORECAST: Yes, it will be déja vu all over again: when China’s logistics chain starts moving again and Shanghai’s port reopens, freight rates will skyrocket, ships laden with late-arriving goods will clog ports in Europe, the U.S., and elsewhere, and shortages will drive inflation harder.