"China\u2019s zero-Covid policy is so strict that it shut down a whole shipping terminal after just one case"

" \n China\u2019s zero-Covid policy is so strict that it shut down a whole shipping terminal after just one case \n \n\n \n China has shut down a key terminal at its Ningbo-Zhoushan port, the third busiest port in the world after one worker was found to be infected by Covid \u2014 a move that will likely put further pressure on already stretched supply networks. \n \n\n \n It was the second time this year that the country suspended operations at one of its key ports. \n \n\n \n Analysts say China\u2019s \u201czero tolerance\u201d approach toward Covid will exacerbate already stressed supply chains this year. Some warn that this may not be the last closure at a port as long as Beijing continues to take this stance. \n \n\n \n Dawn Tiura, CEO of Sourcing Industry Group \u2014 an association for the sourcing and procurement industry, said China\u2019s stance will lead to \u201csevere\u201d supply chain consequences. \n \n\n \n \u201c China has a zero-tolerance for COVID. One person testing positive is enough to shut down (the) port,\u201d she told CNBC in an email.\u00a0 \n \n\n \n Ningbo-Zhoushan is the third busiest in the world by container volume. In 2019, it handled 27.49 million twenty-foot equivalent units (TEUs) of container throughput, according to the World Shipping Council. Container volume in 2020 rose nearly 5% to reach 28.72 million TEUs. \n \n\n \n All inbound and outbound services at the Meishan terminal at the Zhoushan port were suspended on Wednesday until further notice,\u00a0 according to Chinese state media .\u00a0The terminal is key to servicing shipments to Europe and North America.\u00a0 \n \n\n \n Read: Ghana likely to default on its debt obligations but\u2026 \u2013 Seth Terkper \n \n\n \n Supply chains have already been majorly disrupted this year by crises such as the shortage of shipping containers, and the Suez Canal incident. In June, Covid infections triggered disruptions at shipping hubs in Southern China , including the key Shenzhen and Guangzhou ports \u2014 the first time that China suspended operations at ports due to Covid cases. \n \n\n \n Implications of China\u2019s \u2018zero Covid\u2019 stance \n \n\n \n China\u2019s zero tolerance for the Covid approach suggests that this latest port disruption may not be the last, said Nick Marro, head of global trade at the Economist Intelligence Unit. \n \n\n \n \u201cChina\u2019s \u2018zero Covid\u2019 approach means that officials will prioritise pandemic mitigation over everything else, especially given the highly contagious nature of the Delta strain, and the risks that the current outbreak poses to future economic performance over the third quarter,\u201d he said in a note on Wednesday. \n \n\n \n \u201cAs long as authorities maintain this \u2018zero Covid\u2019 stance, the risk of sudden disruptions caused by testing or lockdowns will persist, which closely ties any hopes of normalcy to factors like national vaccination timelines,\u201d he added. \n \n\n \n China has been experiencing a resurgence of Covid cases\u00a0due to the highly transmissible delta variant. Daily cases crossed the 140 marks on Monday \u2014 the highest number of daily infections since January, according to Reuters.\u00a0Chinese authorities have ordered\u00a0mass testing in a few areas and imposed widespread movement restrictions\u00a0in major cities including Beijing. \n \n\n \n The suspension of services at the Meishan terminal comes as container shipping rates continue to soar this year. Container shipping rates from China and East Asia to the west coast of North America have surged over 270% this year to over $15,800 per TEU, according to the Freightos Baltic global container freight index. Meanwhile, rates to the east coast have soared over 220% to hit over $17,500 per TEU, according to the index. \n \n\n \n Analysts warn that there will be further delays, and consumers will likely have to bear the costs as the holiday season approaches. \n \n\n \n Tiura pointed out that the earlier June Covid outbreak led to Shenzhen\u2019s key Yantian terminal slashing 70% of exports as a result. It tripled the wait time for processing shipments from 3 days to 8 or 9 days. \n \n\n \n \u201cIf we experience something similar here, and the time to move ships through the port doubles or triples, we\u2019ll see a substantial and long-term impact on exports that affects the holiday shopping season and furthers inflation,\u201d she said.\u00a0 \n \n\n \n \u201cContainer shortages were already straining global supply chains. Given that Ningbo-Zhoushan is the third-largest container port in the world, this shutdown makes an already bad situation much worse,\u201d Tiura said. \n \n\n \n She said container capacity will likely get more expensive, and shippers will likely pass costs on to consumers, heating up global inflation further ahead of the key holiday season. \n \n\n \n Mario Ciabarra, CEO of digital analytics firm Quantum Metric, said retailers will face much uncertainty heading into the holiday season, and inventory challenges will be one of them. \n \n\n \n \u201cInventory levels will be retailers\u2019 primary concern as they are faced with the decision to either have limited or no stock of certain items or manage higher costs associated with air shipping goods instead,\u201d he told CNBC. \n \n\n \n Marro from the EIU also pointed to disruptions that will be compounded by key demand ahead of the holiday season. \n \n\n \n \u201cInterruptions to trade not only pose problems for shipping and consumers but also manufacturers who rely on critical imported components,\u201d he said. \n "

"China\u2019s zero-Covid policy is so strict that it shut down a whole shipping terminal after just one case"

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