Global goods stuck in Chinese ports as lockdown hit supply chain again

Shipping costs are on the rise again as congestion builds after falling sharply from last year’s peaks.

The Baltic Dry Index, a closely watched trade barometer tracking shipping costs, is up more than 60 per cent since its nadir in January and is beginning a fresh uptick.

While supply issues should be eased by reopenings in the West shifting demand from goods to services again, China’s struggle to contain the Omicron variant is causing severe disruption again.

Last week, almost 500 ships were stuck outside Shanghai, the world’s largest container port, according to Bloomberg data.

In addition to problems at Chinese ports, BCA Research analyst Roukaya Ibrahim said that supply problems are being worsened by COVID restrictions on lorry drivers. “Travel restrictions, quarantines, and policies that require truck drivers to take COVIF tests before crossing municipal borders are delaying the inland transportation of goods between factories and ports,” he said.

“The trucking shortage, along with a shortage of port workers, is also creating congestion off China’s ports which is slowing down the delivery of goods in and out of China.”

The chaos at ports is expected to stoke inflationary pressures further as prices rise at their fastest pace in 30 years in the UK.

Deutsche Bank said global supply chain problems would be part of a “very strong cocktail” causing inflation in the UK to surge above 8 per cent until next year.

The Telegraph, UK

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