Ship traffic jams in Shanghai are driving prices up in Germany as well

Economy
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Ship traffic jams in Shanghai are driving prices up in Germany as well

Ships queue in front of the world’s largest port in Shanghai. Crown lock hinders the transportation of goods by truck. The “shockwaves” to global supply chains are also having an impact in Germany.

The congestion of merchant ships due to the ongoing crown lockdown in Shanghai is enormously disrupting global supply chains and will result in higher prices.

“Delivery bottlenecks will now also be felt in Germany,” said Maximilian Butek, German affairs delegate in Shanghai, the German news agency. According to estimates, the export volume of the largest port in the world has already decreased by around 40%.

Many companies have not received their goods from the country for more than three weeks, the delegate said. Alternative delivery routes through other ports were not sufficient to cushion the loss. “The shortage of supplies from China will continue to have a negative impact on the already high inflation in Germany,” said Butek.

The concerns of shipping companies are growing

“Maritime supply chains were already tight before the lockdown in Shanghai – now we fear further delays in shipping,” said Gaby Bornheim, president of the VDR German Shipowners’ Association. It was “sand in the gears”. Now we need patience. The shipping companies have tried everything to transport the cargo quickly.

Rolf Habben Jansen, head of the Hapag-Lloyd shipping company, is cautiously optimistic. “We are now also seeing early signs that more freight is being handled in the ports of Shanghai and Ningbo,” he told RTL and ntv television channels. He therefore personally expects the situation in Chinese ports to normalize as much as possible in four or six weeks.

Car manufacturers or machine builders could be affected

The Kiel Institute for the World Economy (IfW) estimates that current problems will only have a full impact on Germany in about two months. The goods take 30 to 40 days on the way to Hamburg, after which they have to be transported further. “Then there could be delays with electronic items like televisions or tablets or with intermediate goods for German manufacturing,” said IfW trade expert Vincent Stamer. This could affect, for example, car manufacturers or car manufacturers.

For a month now, there has been a curfew in the metropolis of Shanghai, which has a population of 26 million. The port city is at the center of the largest crown wave in China since the start of the pandemic more than two years ago. With lockdowns, mass testing and quarantine, the Beijing leadership is pursuing a rigorous zero-Covid strategy, which has been severely tested by the omicron BA.2 variant.

Resolving supply chain disruptions could take months

“The shockwaves that the stalemate is unleashing here in China are not yet fully understood,” said Butek delegate in Shanghai. It could take months to correct disruptions in supply chains. The port of Shanghai is not the biggest problem per se. The difficulty is rather in the transport of goods by truck due to the strict crown measures.

“In principle, this applies to all product groups,” said the delegate. “But there is great concern, especially with regards to electronic items and raw materials or preliminary products.” The block now affects all businesses, regardless of industry or size. There are huge limitations in supply chains, transportation and logistics options, or personnel and manufacturing.

“Nobody wants to be a truck driver anymore”

Overzealous local authorities make life difficult for mostly self-employed truck drivers. They must apply for special transit permits, undergo constant testing and be subject to the quarantine requirements of individual cities. At the national level, freight traffic has already drastically decreased. But many especially avoid the port of Shanghai.

“Nobody wants to be a truck driver anymore,” said the head of the EU Chamber of Commerce in China, Jörg Wuttke. “Life is too hard.” Truck availability in Shanghai is estimated to have decreased by 40%. Ascending trend. The containers are not picked up and are stacked. The warehouses are closed. Refrigerated or dangerous goods cannot be removed. “It makes a complicated situation even more difficult.”

During talks with the Commerce Ministry, the EU Chamber proposed standardizing requirements for truck drivers in the six provinces of the Yangtze River Delta. Roadblocks at motorway exits should be removed and truck drivers should be provided with food and rest areas. Traffic must be able to move freely.

However, the crisis is far from over as Omicron is spreading to China and strict countermeasures are taking over the second largest economy. “The question now is whether China will move away from the zero-Covid strategy or whether other major cities will be blocked,” said the IfW expert Stamer. However, the longer the curfew lasts, the greater the impact, not only on the Chinese economy, but also on global supply chains and international trade.

© dpa-infocom, dpa: 220422-99-02138 / 3

(Dpa)

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