International Thursday: Shanghai Lockdown Lifted, Container Surge Awaits
Shanghai may finally come out of its weeks-long lockdown soon – but a return to normal for China’s largest city and adjoining port may cause more congestion and headaches at America’s west coast.
The Chinese government officially lifted the bulk of its COVID-19 lockdown at Shanghai earlier this week. Approximately 25 million residents are now able to move about the city for the first time in two months. Relaxing restrictions means supply chain workers can return to operations in trucking, port operations, manufacturing, and more.
That’s good news for industries that are waiting on inventory and components. But a sudden release of pent-up goods and containers threatens to overwhelm U.S. ports just after they have seen recent improvements.
Container “Whiplash” Expected at West Coast
The closure of Shanghai amid its coronavirus outbreak severely stalled manufacturing and logistics output. While its port – one of the largest and busiest in the world – remained open, factory workers and truck drivers were stuck at home. The Port of Shanghai effectively ground to a halt.
Inbound and outbound containers alike have been sitting by the thousands at the port for the duration of the lockdown. Now that work is set to resume, those boxes will head toward the U.S. quickly.
Across the pacific, the ports of Los Angeles and Long Beach have enjoyed a relative lull. Wait times for vessels have decreased and the ports are operating with fewer backlogged containers than in months past. A sudden rush of volume from Shanghai could hinder that progress and send the neighboring ports back into a mire of delays and congestion.
To top it off, industry leaders expect an earlier than usual peak season starting at the end of June as retailers ensure their inventories are well stocked before quarters 3 and 4. The one-two punch of Shanghai volume whiplash and early peak season orders may cause significant summer headaches for importers.
Dwell Fees Remain a Threat
Just as volumes and congestion are expected to rise, the ports’ long-threatened excessive dwell fees may finally take effect.
The threat of excessive dwell fees at LA-LB terminals has been credited with helping to drastically reduce the number of containers sitting at the ports. However, there are still thousands overstaying their welcome daily.
The ports of Los Angeles and Long Beach originally announced their dwell fee plan back in October 2021 and have delayed implementation each month since. But the industry rumor mill points to incoming summer volumes as a sign that the fees may finally be implemented to keep traffic flowing through terminals and help avoid terrible congestion.
Navigating the Shifting International Freight Landscape
The one thing that has not changed for international freight forwarding throughout the pandemic is change itself. We see from China’s pandemic lockdown policies that shutdowns and re-openings can quickly alter the logistics landscape. As timelines, prices, and availability change, so will your needs.
Scarbrough International has the means to move with the tides of trade. Our freight forwarding experts will steer your cargo as circumstances on either side of the Pacific shift. Contact us for ocean freight options from China and we will tailor a solution to fit your needs.