Covid-19 outbreaks and factory closures in China for the Lunar New Year holiday are causing disruption to global shipping.
Hamberg, Germany-based Container xChange, a tech firm working in the shipping sector, said the results of its most-recent survey of around 2,300 members of the supply chain industry confirmed the dual challenges of Chinese New Year and Covid-19 have impacted global supply chains.
“There are added and new complexities ahead, coupled with Chinese New Year, where at one end, we see China coping with the Covid infections, and on the other end we see a continued dip in demand," Container xChange CEO and Co-Founder Christian Roeloffs said in a press release. "We cannot see Chinese New Year in isolation but in combination with all these challenges. The biggest concern is the reduced production and port capacity due to the infections in China. Also, the rates are low, capacity management is still a top priority for carriers, and blank sailings are prominent. Amidst this, in the coming weeks, we foresee prolonged factory closures and bearish market conditions.
The survey revealed a 73 percent increase in supply chain professionals who expect a disruption in the shipping industry in 2023.
Logistics Trends and Insights Founder and President Cathy Morrow Roberson said an earlier Lunar New Year holiday, combined with an estimated 40 percent year-over-year drop in holiday orders from the U.S., resulted in many Chinese factories closing down two weeks early. But that has been offset by a nationwide outbreak of Covid-19 that has spread following the country's casting aside of its zero-Covid policy in November 2022.
“It’s not what we’ve been accustomed to in the prior years when there was demand leading up to the Chinese New Year," Roberson said. "There is a lot of inventory with retailers and manufacturers. Inflation and fear of recession continue to impact demand. And therefore, the spot rates have started to fall off the cliff. There are a lot of unknowns, and preparing with better data, information, and visibility into the supply chain is the way to navigate through these unforeseen times."
One upside noted in the global shipping sector is that congestion in American ports is clearing, as a drop in U.S. imports and the longer factory closures in China are allowing for a recovery. Most major ports in the U.S. "are coming back to normal capacity and stack utilization," Container XChange reported.
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