Lockdown in Shanghai - higher prices loom in Germany

Photo by Dominik LückmannThe congestion of cargo ships due to the ongoing corona lockdown in Shanghai is disrupting global supply chains and will lead to higher prices in Germany. "The supply bottlenecks will now also be felt in Germany," Maximilian Butek, the delegate of German business in Shanghai, told the dpa news agency on Friday. According to estimates, the export volume of the world's largest port has already dropped by around 40 percent.

Many companies have not been able to get their goods out of the country for more than three weeks in some cases, the delegate said. Alternative supply routes via other ports were also not enough to cushion the shortfall. "The shortage of supplies from China will have a further negative impact on inflation in Germany, which is already high," Butek said.

Shipping companies' concerns are growing. "Maritime supply chains were already strained before the Shanghai lockdown - now we fear further delays in sea transport," said Gaby Bornheim, president of the German shipowners' association VDR. There is "sand in the gears." Patience is now necessary. The liner shipping companies are trying everything to transport the cargo volumes quickly. Rolf Habben Jansen, head of Hapag-Lloyd, is cautiously optimistic. "We are now also seeing the first signs that more cargo is again being handled in the ports of Shanghai and Ningbo," he told the RTL and ntv television stations. He personally therefore expects the situation in Chinese ports to largely normalize in four to six weeks.

However, the current problems are not likely to have a full impact on Germany for about two months anyway, estimates the Kiel Institute for the World Economy (IfW). The goods would be on the move for 30 to 40 days until Hamburg, for example, after which they would still have to be transported further. "Then there could be delays, for example, in electronic goods such as televisions or tablets, or in intermediate goods for German production," said IfW trade expert Vincent Stamer. This could affect car manufacturers or mechanical engineers, for example.

"The shockwaves caused by the shutdown here in China cannot even be fully grasped yet," delegate Butek said in Shanghai. It will likely take months to resolve the supply chain disruptions. The port itself is not the biggest problem, he said. Rather, he said, the difficulty lies in the transportation of goods by truck to and from the port because of the strict Corona measures.

"In principle, this affects all groups of goods. But especially for electronics items and raw materials or precursors, there is a lot of concern," the delegate said. The lockdown now affects all companies - regardless of industry or size, he said. There are massive disruptions to supply chains, transportation and logistics capabilities, or personnel and production, he said.Overzealous local authorities are making life difficult for the mostly self-employed truck drivers. They have to apply for special transit permits, undergo constant testing and submit to the quarantine requirements of individual cities. Nationwide, freight traffic has already dropped drastically. But many avoid the port of Shanghai in particular.

"Nobody wants to be a truck driver anymore," said Joerg Wuttke, chairman of the EU Chamber of Commerce in China. "Life is too hard." According to estimates, truck availability in Shanghai is down 40 percent. The trend is upward. Containers go unclaimed and pile up. Warehouses are closed. Refrigerated or hazardous goods can't be removed. "This makes a complicated situation even more difficult."

In talks with the Ministry of Commerce, the EU Chamber proposed standardizing requirements for truck drivers in the six provinces in the Yangtze River Delta. Roadblocks at highway exits would have to be removed and truckers provided with food and rest areas. Traffic would have to be able to flow freely.The port city of 26 million has been hit by widespread curfews for the past month. The metropolis is at the center of the largest Corona wave in China since the pandemic began more than two years ago. With curfews, mass testing and quarantine, the Chinese leadership is pursuing a strict zero-Covid strategy, but the arrival of omicron variant BA.2 is putting it to a severe test.

The port of Hamburg, for example, is feeling the pinch. As a result of major ship delays, containers are piling up at the terminals, causing warehouses to be overloaded, according to Hans-Jörg Heims, spokesman for Hamburg port logistics company HHLA. As a result, he said, quite a number of ships currently have to wait off Helgoland until space becomes available in their destination port. According to Heims, there are ten freighters currently heading to Hamburg. "This can take anywhere from a few days to a few weeks." Despite all efforts and a large-scale deployment of personnel and technology, there are delays in clearance, he said.

How did these problems come about? "Triggered by the Corona pandemic, there have been disruptions in supply chains around the world for two years," Heims said. "As a result of lockdowns in major Chinese cities, operations at ports there have been disrupted time and again. And then ships get jammed there. If the congestion breaks up, the wave arrives in Europe a few weeks later." For the past two years, HHLA has repeatedly managed such situations well, he said. But ship schedules have been out of control due to other events, such as the blockade of the Suez Canal by the large container ship "Ever Given" for days in March 2021, bad weather, and most recently Russia's war of aggression against Ukraine, he said.

HHLA has already occupied additional space with containers, he said. "But we are reaching limits the longer the situation on the supply chains remains so tense," Heims reported. The more containers there are in a warehouse, the greater the effort required for handling and the longer it takes to clear them, he said. In the past, it took 500 meters to move a container from the warehouse to the ship. Today, it sometimes takes 1.5 kilometers - depending on where the container is located. The situation at a terminal in the Port of Hamburg was made more difficult by construction work for shore power. As a result, a berth could not be used at times.



Photo by Dominik Lackmann

 


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