Maersk warns of lockdown in Shanghai city to further increase transport costs

FILE PHOTO: Container ships in the Suez Canal
FILE PHOTO: Shipping containers are transported on a Maersk Line ship through the Suez Canal in Ismailia, Egypt July 7, 2021. REUTERS/Amr Abdallah Dalsh

March 29, 2022

SHANGHAI (Reuters) – Danish haulier Maersk said the lockdown in Shanghai will severely affect truck services and increase transport costs as China’s intensified efforts to combat the spread of COVID-19 continue to shake global supply chains.

The Chinese coastal city, home to some of the world’s busiest seas and airports, began locking down half of the city on Monday and intends to do so for the other half for four days starting Friday in a two-stage test exercise.

While it has kept its airports and deep-water ports open, it has imposed strict restrictions on movement, barred unauthorized vehicles from the streets and urged millions of people not to leave their homes.

“Truck service to and from (from) Shanghai will be suspended until 5 customers on Monday due to a total lockdown in Shanghai’s Pudong and Puxi areas.

It added that warehouses in Shanghai were closed until Friday.

“Consequently, there are longer delivery times and a possible increase in transport costs such as diversion and motorway fees.”

SEKO Logistics, a US-based cargo transportation and warehousing company, said factories in the neighboring province of Zhejiang have opted to shift cargo from the port of Ningbo rather than Shanghai.

“We expect: a strong increase in air freight rates from today. We’ve already had some sky-high bids for inquiries to Europe today,” it said on its website.

China is grappling with the largest number of COVID-19 infections since the country’s first outbreak began or declined in early 2020. This month, other manufacturing export hubs like Changchun and Shenzhen went into lockdown, leading to longer queues outside of the major Chinese ports.

Though curbs remained in place in Changchun, they were eased in Shenzhen, where businesses and factories were allowed to resume operations on March 21.

However, a survey conducted by a state-run newspaper found that Shenzhen’s “war” on COVID-19 has hurt up to 93% of local small and medium-sized businesses, with many suffering production disruptions due to shutdowns, disruptions in supply chains and delays in order executions.

(Reporting by Brenda Goh. Editing by Gerry Doyle) Maersk warns of lockdown in Shanghai city to further increase transport costs


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