An increase in the number of the labour force being infected by COVID-19 is slowing production for Chinese manufacturers since they cannot operate properly causing the manufacturers to cancel freight bookings at the Chinese ports.
Hong Kong-based shipping firm HLS noted that the number of the labour force affected by COVID stands between half and three-quarters of the entire labour force.
The supply chain issues at the ports are also caused by the effect of COVID on container pickup, loading and trucking.
Through the HLS’s note to their clients, it stated that the three major ports in China (Port of Shanghai, Port of Shenzhen and Port of Qingdao) are experiencing great supply chain problems due to the effects of the surge of infections on the labour force and the community at large.
In the Port of Shanghai, the world’s number one container port, and the Port of Shenzhen, the fourth-largest container port in the world and the city that is home to Apple, HLS warned that the increase in COVID infections is increasing freight booking cancellations since the manufacturers are producing well below optimal amounts.
Only a quarter of the labour force is currently working in factories around Qingdao, the sixth-largest port in the world.
Alex Charvalias, Supply Chain In-Transit Visibility Lead at MarineTraffic said, “While China has recently removed its zero-Covid restrictions, the congestion in Shanghai seems to have risen as MarineTraffic data shows that during the first week of 2023 that the average vessel TEU (twenty-foot equivalent unit) capacity waiting out of port limits was 321,989 TEUs, which is the highest amount recorded since April 2022. Also, the congestion in Ningbo and Qingdao is rising as well, with 273,471 TEUs and 277,467 TEUs, respectively.”
At the end of this month and at the beginning of February, supply chain hitches and freight problems are predicted to reach a breaking point when COVID-driven absenteeism in China coincides with the start of the Lunar New Year to produce severe labour shortages.