New COVID-19 outbreaks in China threaten to delay shipments to largest US port
New coronavirus outbreaks in southern China threaten to create new bottlenecks again in the largest US port, even as the recovery of Western economies helps to significantly reduce its stocks.
In an interview with Yahoo Finance Live, Port of Los Angeles executive director Gene Seroka said he expected to see “a bit of a lull” with about a third of his cargo coming from the Delta delta. Pearl River in Guangdong Province.
“What we are seeing is that 50% of normal productivity is taking place,” Seroka said. “Some liner companies are omitting these southern Chinese ports. There is cargo crossing the border to Hong Kong. The five terminals in Hong Kong are really full at the moment.
With nearly 60% of its containerized imports coming from China, the Port of Los Angeles remains extremely sensitive to any delay in Asia.
China reported just 20 new cases of the coronavirus on Thursday, according to data from Johns Hopkins University. Although that number remains well below the country’s peak last year, concerns over an outbreak linked to the Delta variant, first detected in India, have led to strict shutdowns in vital industrial province of Guangdong.
This has contributed to massive delivery delays at major Chinese ports. In Shenzhen, an epidemic among dockworkers at Yantian Port nearly halted traffic. the Wall Street Journal Reports some ships have had to wait up to two weeks to embark at Yantian, pushing up the cost of transport by more than 60% since the start of the year. The world’s largest container line, Maersk, recently warned of delays of up to 16 days outside Yantian, claiming the situation was much worse that the delays caused by the blockage of a ship in the Suez Canal in March.
“I don’t think we have an answer to [the extent of the delays]. We will likely see a slight lull if they are operating at 50% capacity, ”Seroka said. “When people get back to good health and to work, we’ll see activity pick up a bit. But at a third, and with the information system, the port optimizer that we have being able to see at three weeks with some precision, we will be able to handle that.
The potential bottlenecks come as the port of LA continues to rebound from the lows of the pandemic, with Western countries leading the economic recovery. In May, the port handled over one million container units, marking the busiest month in the port’s 114-year history. Inventories are down 75%, while the number of ships anchored and awaiting processing is expected to hit near zero by the end of the month, Seroka said.
Outside of Los Angeles, port congestion continues to disrupt supply chains, posing significant challenges across industries. Monday, the National Retail Federation sent a letter to the White House, requesting a meeting with the Biden administration, to discuss solutions to mitigate the disruption. In a recent survey of NRF member companies, more than 95% of retailers said they had been affected by delays in ports and shipments.
Seroka said shipping traffic is expected to slow in the second half of the year.
“We are going to talk about fall fashion for the start of the school year, as well as the end of year holidays. What remains to be seen, however, is how the American consumer will go from buying these retail products as we have done over the past 11 months to returning to the service sector, ”he said. he declares.
Akiko Fujita is a presenter and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita