China is blocking more highways to curb the spread of coronavirus in the country as the snarl-up in cargo traffic is expected to deteriorate and further weigh on ocean freight rates. The move comes as the number of domestic positive cases continues to rise, with several mega cities such as Beijing, Hangzhou, and Guangzhou, recently experiencing a resurgence of infections — in addition to Shanghai, which is on strict lockdown. Most provinces in east and central China — including Zhejiang, Henan, and Shandong — where economy and transport systems are seen more developed than those in the country’s west, have started to shut highway exits and entries, according to local government statements.

Although most highways remain open, authorities have tightened scrutiny there on the passage of drivers, exacerbating congestion levels. Waiting time on the G2 highway that links Shanghai and Beijing, for example, has exceeded 20 hours, according to DuckBill, a Shanghai-based container trucking company. It said in a circular that some nearby cities such as Yiwu and Taicang now reject the entry of truck drivers from Shanghai, while others require government-issued passes, among other certificates, to allow them in. One senior executive of the company told Lloyd’s List that trucking volume is severely impacted, as many drivers in Shanghai are still locked up at home while less cargo is available in hinterland.

China’s transport ministry held a meeting last week, aiming to safeguard the country’s road transport from the disruptions caused by coronavirus control rules. The meeting, which was also participated by officials from other ministry-level bodies, including the National Development and Reform Commission, and Ministry of Public Security, has required local governments not to arbitrarily block roads or tighten travel restrictions and called for the establishment of a nationwide pass system for truck drivers. “I do not expect any significant improvement anytime soon.” said a Shanghai-based freight forwarder. “The local officials will not really listen to the transport ministry because coronavirus prevention is overriding economic growth on their agenda.”

Maersk foresees the efficiency of its trucking service to and from Shanghai will be further impacted because of the lockdown measures in the Chinese financial and shipping hub, it said in an advisory. It previously expected a 30% reduction. The Danish giant also announced that several vessels will be omitting Shanghai port. They include Maersk Hamburg (IMO: 9784312) on Asia-Europe trade, Maersk Karun (IMO: 9624299) on Asia to West Africa. It also offered relief packages for customers to amend or cancel outbound and inbound shipments free of charge. It and other shipping lines have announced that reefer cargo, and some types of dangerous cargo, will be discharged at alternate ports.

With clogged road transport and disrupted manufacturing output, the cargo volume is expected to drop. Sea Intelligence said the ripple effect of China’s pandemic-related measures will inflict continued downwards pressure on spot rates. “As carriers have not yet blanked sailings due at Shanghai, it means their capacity utilization is lower than expected, and consequently spot rates will still see a downwards trend,” it said in a report, adding the softening sport markets also weigh on contract rates that are still being negotiated on transpacific trade. Carriers may eventually respond by void sailings to shore up rates, however. “This will stem the fall in rate levels but will in turn create more problems in terms of equipment repositioning, setting the 2022 peak season up for even more shortage problems,” said Sea Intelligence. New cases reported in Shanghai, the worst-hit Chinese city during the current outbreak wave, has continued to grow, exceeding 26,000 on April 10. That said, the municipal government announced plans over the weekend to relax some lockdown restrictions in part of the city, where the situation of infections is under control. Residents in those so-called “precaution zone” — residential compounds and villages where no new cases have been reported over the past 14 days — will be allowed to leave their home and travel within the neighborhoods where they live. However, production facilities in those areas are not expected to be restored yet. While the time frame for a reopening of the city is highly uncertain, a surge of cargo coming out of Shanghai could be expected once it arrives, Vespucci Maritime chief executive Lars Jensen said on the Baltic Exchange. “This will be a mix of cargo which has not loaded during the lockdown as well as factories playing catch-up with lost production while under lockdown. This will lead to a sharp upwards pressure on freight rates.” Some, however, suggested the pent-up cargo volume could be disappointing.

Part of the lost trucking capacity is being compensated by increased barge services offered by carriers and ports, said forwarding sources. Also, shipments from factories have been weak since late January after the Chinese New Year holiday amid lackluster demand from the large consumer countries. “The situation now is that I am chasing factories for their shipments with a slew of available slots,” said one freight forwarder in Shenzhen, which exited a city-wide lockdown a few weeks ago.