The container shipping industry could see a “very strong” pickup starting late April as the Covid situation in China eases, Tim Huxley, founder of Mandarin Shipping, told CNBC’s “Street Signs Asia” on Monday.
Shanghai has been on lockdown since last month because of a rise in Covid-19 cases. The city, also home to the world’s busiest container port, subsequently suffered from a breakdown in the logistics supply chain.
“The port itself has actually stayed open so ships are actually coming in, but it’s getting cargo to and from the port,” Huxley said.
Since late February, China has been slammed with a surge of Covid cases in the country’s worst wave since the pandemic began in early 2020. China has imposed stringent rules on truck drivers entering Shanghai, its largest city and one of the hardest hit in the recent outbreak. Those restrictions have made it more expensive and less efficient to transport goods in and out of the city.
Huxley said Shanghai has tight supply chains and “just-in-time” deliveries. As a result, he said, factories quickly shut down when there are supply chain disruptions and that is where the “big stress” has been.
The queue of container ships outside major Chinese ports like Shanghai has been getting longer by the day, and Huxley said many ships are not even calling in Shanghai now.
Supply chain disruptions have dogged the global economy since the early stages of the pandemic as a result of lockdowns, changes in consumer behavior and, more recently, the Russia-Ukraine war, among other factors.
It may take a while for things to completely return to normal, but Huxley says “considerable” comfort can be taken in China’s “incredibly quick” bounce back from its 2020 Covid lockdown.
“As a result, we then had the strongest surge in container freight rates and container shipping demand in history,” he added.
“This time — we don’t know obviously — but there is clearly going to be huge amounts of pent-up demand, both with factories returning to work and with getting these exports and manufactured goods out again,” Huxley said.
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