When Yantian port crashes, global trade derails

This year, Santa’s worst enemy might be a port the general Western public has never heard of. Off the coast of Shenzhen, a city in southern China across from Hong Kong, nearly 50 container ships are still stranded in Yantian Port, a critical hub for international trade.

It’s a little better than a few days ago, when more than 70 ships were waiting for work to resume at the world’s third-largest commercial port, and the largest in China. Authorities had it closed in mid-May for two weeks to fight an outbreak of Covid-19 in the Guangdong region, where Shenzhen is located. Several port workers had also tested positive.

Domino effect

Now, 70% of the activity in Yantian has resumed, announced the port authorities who hope for a return to normal by the end of June. But “the damage is already done”, announced Maersk, the largest container ship owner in the world.

The consequences of the giant naval traffic jam off Shenzhen already exceed those of the blockage of the Suez Canal by the ship “Ever Given”, last March. Nearly 300 freighters had to cancel their trip, change destination or find another port to pick up their delivery, Oneshipping, a Chinese shipping logistics company, calculated. cited by the Global Times, a Chinese daily close to power.

Of analysts estimated that closing the port for two weeks alone resulted in the inability to deliver or embark more than 2,000 kilometers of cargo, or 357,000 twenty-foot equivalents – the standard measure of a carrier’s capacity. container with a length of 20 feet, or about six meters. This is more than the impact of the six days of stopping traffic in the Suez Canal (330,000 equivalent to twenty feet of goods).

And that’s a conservative estimate. Because the closure of the port of Yantian had a domino effect. Ships had to seek other home ports, creating new traffic jams, whether in Hong Kong or Nansha (near Macau).

Even if the activity has partially resumed in Yantian, getting there and leaving is still a real obstacle course. Container ships have to wait about two weeks to hope to be able to sail again, underlines the South China Morning Post, one of the main Hong Kong dailies.

The extent of the market debacle is, therefore, not yet known. But professionals in the sector already know that the consequences will be felt for a long time even on the shelves of stores all over the world.

A grain of sand size XXL

The port of Yantian is indeed crucial for Chinese exports. Normally, more than 35,000 freighters fill their containers there every day, and it is responsible for nearly 20% of all goods shipped by sea to the United States. Globally, more than 10% of Chinese exports leave this port.

Phones, computers, televisions, textiles and other components used by factories around the world to manufacture, then, other products are likely to arrive very late. At what point ? “People are probably not going to find everything they are looking for for holiday gifts,” admits Peter Sand, an analyst for the international shipping association Bimco, interviewed by CNN.

Indeed, the problems of the port of Yantian are perhaps the straw that will overflow the camel’s back of a maritime trade already close to the breaking point. First, there was the Suez Canal incident which caused delays in the chain for container ships.

Then, the gradual end of the health crisis led to a strong rebound in demand. The only problem: China, which emerged from the Covid-19 epidemic earlier than the rest of the world, was one of the only countries to have its factories back on line in time to meet the needs of consumers around the world. Consequence: “The share of Chinese exports in world trade has reached a new record,” said Larry Hu, chief economist at Australia’s financial consultancy Macquarie Group, interviewed by the Financial Times.

In other words, the smallest grain of sand in the great Chinese export machine has, currently, even more serious consequences on world trade than before the pandemic. And the closure of Yantian Port is an XXL grain of sand. Suffice to say that the great speeches at the start of the pandemic on the need for world economies to depend less on China for their supply are far from having been translated into action.

It is, moreover, not just a matter of delay. The pressure on maritime trade, accentuated by the Yantian port episode, has caused the prices of container ship transport to explode. Currently, it costs $ 20,000 for the trip of a 40-foot container ship between Asia and Northern Europe, up 1,000% from the pre-pandemic period, notes the Süddeutsche Zeitung, one of the main German dailies.

A rise in prices that is not only felt at sea. Importers, in an attempt to get around the current congestion in maritime trade, have sought to bring their products by train or truck, when possible. A frantic search for alternatives which has already led to a doubling of the price of road transport between Asia and Europe compared to before the pandemic, underlines the Financial Times.

For The Wall Street Journal, this pressure on prices risks being passed on in part to products sold in stores from the start of the school year … if they arrive safely.