This Chinese port paralyzes shipping worldwide

The port of Yantian in southern China is closed. Dozens of ships are already waiting off the coast, as satellite images show. The consequences could be more serious than the blockade of the Suez Canal.

“Economy from above” is a collaboration between WirtschaftsWoche and LiveEO. This is a translation of the original article (written in German by Jacqueline Goebel). Access the original article here.

Normally, about a hundred ships call at the port of Yantian in a week. Yantian connects the industrial metropolis of Shenzen in southern China with the rest of the world, and that alone shows its importance. Worldwide, only the ports of Shanghai, Singapore, and Ningbo load more containers a year than Yantian.

Normally. Only now, nothing is normal in the shipping industry. After more than a year of the Corona crisis, chaos reigns. Ships are delayed, ports are clogged, freight rates have skyrocketed and there is a shortage of containers. The industry has barely recovered from the six-day blockade of the Suez Canal in March. Now it is threatened with even worse – because of the problems at the world’s fourth-largest port.

Yantian has already been largely at a standstill since the end of May. The official reason: an outbreak of coronavirus in the region. Chinese authorities resorted to harsh measures to stop the virus from spreading beyond the port. The terminal where ships from the West, and thus European goods, are handled closed completely. The terminal where goods from the east are loaded is at least operating at reduced capacity. The number of trucks allowed to enter the port is also limited.

Off Yantian, many ships are already waiting to finally be allowed to enter, exclusive satellite images from LiveEO show. Allegedly, the port will be operating at full capacity again in the coming week. But there is still a lot of uncertainty and little ability to plan. Many shipowners are therefore simply refraining from calling at the port. According to data from the Project 44 analysis platform, 298 ships did not stop in Yantian in the first two weeks of June alone, contrary to their schedules. “That’s 300 percent more than in the previous month,” says Project 44’s Robin Jaacks. Like a stressed bus driver, the ships simply jet past the stop.

Except that passengers on the bus can get off at the next stop if necessary and walk back to their actual destination. This is more difficult with containers. Other ports are also congested and can hardly take containers. And even if they can, they first have to find ships, trucks, or trains that can take containers. On top of that, there are all the containers that have stopped in the port of Yantian like passengers at the bus stop, baffled. It is said to be a matter of more than 300,000 standard containers that now have to be reloaded. The companies that normally export via Yantian include Amazon, Walmart, and Tesla.

08.06.2021: Worldwide, only the ports of Shanghai, Singapore and Ningbo load more containers per year than Yantian.

The consequences are huge. Maersk, the world’s largest container shipping company, announced that Yantian could lead to 16 days of delays in ships’ schedules. “The trend is worrying, and the never-ending port congestion is becoming a global problem,” Maersk wrote to its customers. Because of the port’s enormous importance, this makes Yantian a bigger problem than the Suez Canal blockade, Vincent Clerc, Maersk’s managing director for shipping, told online portal Seatrade.

How long this problem will continue is uncertain. “It’s like looking into a crystal ball,” said Project 44’s Jaacks, adding that the disruption to global trade comes at an inopportune time. Shipping starts its peak season at the end of summer at the latest. In Europe and the U.S., traders are filling up their warehouses with goods from the Far East, and many are already preparing for the end-of-year holidays.

This also leads to rising freight rates. Before the Corona crisis, rates of 1000 to 2000 dollars were still normal. Now a container on the route from Shanghai to Rotterdam costs around 12,000 dollars, reports the analysis service Drewry. This means that shipping is more expensive than ever before.