Chinese Nickel ore imports account for approximately 90-95% of total nickel ore shipments. China imported 43.5 MMT in 2021 (+4.4 MMT/+11% y-o-y) and has historically sourced over 95% of its ore from only two countries, Indonesia, and the Philippines, together with a further 2.5 MMT sourced from New Caledonia.

The Indonesia government two years ago renewed its efforts to slow the depletion of its raw material reserves and promote the development of its domestic smelting industry by issuing a ban on nickel ore exports effective January 2020. This is only the most recent of bans of varying lengths and restrictiveness since this policy shift began in 2014. Regardless, Indonesia’s nickel ore exports to China fell below 0.9 MMT in 2021 vs 3.4 MMT in 2020, and far south of the 24 MMT exported in 2019. As this ban effectively excludes Indonesia from the global supply mix, China sourced around 90% of its nickel ore imports from the Philippines in 2021. Thus, China’s annual imports of nickel ore from the Philippines alone currently represent over 85% of total seaborne nickel ore trade.

As China, the world’s largest producer of stainless steel, of which nickel is a key ingredient, has become increasingly reliant upon the Philippines for its foreign supply of nickel ore, the Duterte administration in the Philippines has worked to relax its country’s mining restrictions. In 2021, following almost a decade of nearly static growth in export capacity, Philippines’ mining expansions allowed exports to China to increase to a record 39 MMT (+7.1 MMT/+22% y-o-y). This figure looks set to rise further in coming years as a Philippines’ industry regulator reported only last week that 12 new metal mines, most of them nickel projects, would begin commercial operations this year.

With the Capesizes less exposed to the impact of the Ukraine—Russia conflict, we look at what is currently driving the Capes higher and what risks may be present.

Following a 15.4% decline on the day following the onset of the war in Ukraine, Capesize 5TC spot rates have increased by 54.0% to $21,596 per day. Less affected by shipments in the Black Sea compared to the smaller size vessels, the region accounted for just 2.5% of Capesize demand in 2021. One factor driving the upturn has been the sharp rise in crude oil prices, in which VLSFO reached all-time highs above $1,000 per tonne. Sentiment has grown in the Cape market as more long-haul coal cargoes to Europe are reported and iron ore volumes out of Brazil have started to improve. However, there may be other factors influencing the rebound in the Capesize 5TC average, which hit its low in 2022 on January 26 at $5,826. The C16 backhaul Capesize rate, although lower in the past couple of days, has risen by $11,750 per day following the war in Ukraine as vessels leaving China are increasingly bid higher to do coal stems for European buyers from locations other than Russia. As buyers scramble for energy supplies it is more efficient to buy coal in larger quantities, particularly with fuel oil at such high prices and the Capesizes trading at a $4,053 per day discount to the Panamaxes based on current time charter averages. 

Coal shift begins

Capesize coal trade has remained strong so far in 2022, with 61.2 MMT loaded across January—February, increasing by 11.3% YoY. However, a decline in demand from China as domestic production is ramped up has slowed overall Cape employment from coal, declining by 9.2% YoY in February. Last month, 1.2 MMT of coal arrived into Chinese ports on Capesizes, declining by 64.5% YoY and the lowest level since November 2020. Although the EU has not officially sanctioned imports of Russian coal, self-sanctioning by many European buyers has resulted in some volumes starting to load from further afield. In February, Colombian coal loadings on Capesizes to Europe more than doubled YoY to 1.4 MMT and the highest since December 2019. So far in March, 686,000 tons has loaded on Capes in Colombia for European destinations. This is already higher than total loadings for this trade in March of the previous two years. The Colombian government last week announced it was discussing an increase in coal exports with the country’s largest producers due to increased demand from European and Central American end-users, implying this trend is likely to continue. From Indonesia, so far 507,000 tons of coal has loaded on Capes destined for Europe in March, the highest level since January 2019. With Chinese demand tapering so far in 2022, there is likely to be more Indonesian volumes available to other buyers, such as Europe, going forward. From other sources, such as Canada and South Africa, we have so far not seen a significant increase in Capesize coal trade to Europe.

Iron ore trades mixed

Out of Australia, iron ore volumes have been relatively strong so far in 2022. Across January-February of this year, 139.0 MMT of iron ore loaded on Capes, increasing by 3.4% YoY. As Australian volumes have remained steady, many vessels have opted to stay in the Pacific and continue doing C5 voyages rather than ballast past Singapore in search of a Brazilian cargo. The current premium to do a C5 voyage versus C3 is $6,161 per day. Delays in Chinese ports will likely cause exporters in Australia to look for prompt vessels, keeping rates in the Pacific healthy. Tonnage supply in Brazil has moderately increased in recent weeks, as slightly higher volumes convince more ballasters to head West and vessels in India/PG which typically do Black Sea trades make the trip across the south Atlantic.

In Brazil, the seasonal rainy season has been harsher than in previous years, particularly in the northern system where the large mining region of Pará is located. Year-to-date accumulated precipitation in northern regions is 10.8% higher YoY and higher than levels at this time of year in each of the past 5 years. Shipments from Brazil across the first two months of the year decreased by 6.0% YoY to 44.9 MMT as mine and port operations were affected. Although conditions moderately improved in recent weeks, current forecasts indicate more rain may be on the way and could delay a substantial improvement in iron ore volumes out of the region.

Fresh lockdowns in China

In the last week, a surge in Covid-19 cases in China has triggered a wave of lockdowns in several regions across the country that may disrupt port operations in the coming weeks. Although we have seen the seasonal unwind in Capesize congestion in China following the Lunar New Year, in the last week we have seen a slight uptick again, with this likely to compound in the coming days. Queues of laden Capesizes have grown by 26.0% WoW to 7.4 MDWT and currently lie 12.3% above the 5-year average for this time of year.

The scope for a rebound in congestion, because of the lockdowns, is now higher given the constraints ports are under when employee infections rise. This is naturally reliant on any lockdowns being prolonged past the one week in which they are currently in place. With China’s Zero-Covid policy still in place and cases rising, it would not be surprising to see these extended. Capesize vessels have also began to slowdown en route to Chinese ports, potentially in anticipation Covid-19 measures are eased and queues are cleared by the time they arrive. Average voyage speeds of Capes discharging in China have declined by 0.15 to 10.47 knots so far in March compared to those in February. In comparison, all laden Capesize voyages are travelling, on average, 0.18 knots faster at present. This slowdown in speeds, particularly towards China, should help support the market going forward as this trend continues.

However, the downside to Chinese lockdowns, in the case these are prolonged, and more are installed if cases continue to rise, is reduced economic activity. Some factories in the manufacturing hub of Shenzhen have reportedly halted operations altogether while lockdown is in place. While this region has a greater focus on consumer goods, further lockdowns could be extended to raw-material intensive industrial regions if the Covid-19 situation worsens.

The Ukraine conflict, which has seen a drop in grain exports leading to higher agricultural commodity prices, is raising concerns about food security risks, especially in import-dependent countries in Africa and Asia, according to the International Grains Council. In a monthly report focused on the conflict, the London-based council said the immediate threat centered on the disruption to export flows, while in the longer-term, crops could be impacted due to fertilizer constraints. While commercial Black Sea port loadings are still halted in Ukraine, there are efforts to increase exports via rail, although overall volumes are likely to be limited, it said, adding that an export licensing system had been recently introduced for wheat, corn, and sunflower seed oil, while shipments of barley, rye, oats, and millet are currently banned.

“While the extent of infrastructure losses is unknown, potential damage to port facilities, railroads and storage silos could impact shipments over the longer term,” it said “In addition to tight availability of fuel, farm inputs and labour, access to some fields is currently impossible, leading to mounting worries about farmers’ ability to fertilize winter crops and plant spring varieties. The conflict has heightened concerns about tight global fertilizer supply chains, stoked by restricted shipping operations to the region, as well as latest sanctions on Russia and Belarus, respectively two of the world’s leading suppliers of nitrogenous and potash fertilizers.” It added that the spike in natural gas prices, a key feedstock in nitrogen fertilizer production, has also contributed to recent price gains. “With elevated input prices and tight availabilities already a concern before the hostilities, the rising costs of production could impact upcoming acreage decisions and application rates, with possible implications for global yields and crop quality.”

Most of Russia’s Black Sea terminals were however operational as of mid-March, the IGC said, with some ongoing restrictions in the Azov Sea. Some loadings had recently resumed, although volumes may be hampered by trade finance restrictions and additional ocean freight insurance requirements. There are reports that the Kremlin may ban the export of wheat, rye, barley, and corn from March 15 to June 30, further crunching supplies. US grains producer and trader Cargill has said it would scale back its business activities in Russia and has “stopped investment,” although it would continue to operate its “essential food and feed facilities” there. “Food is a basic human right and should never be used as a weapon,” it said. “This region plays a significant role in our global food system and is a critical source for key ingredients in basic staples like bread, infant formula and cereal.”

According to the IGC, additional exports from other origins, including India, the US, the European Union, and Brazil, will likely only partially offset lower Black Sea shipments over the remainder of the current season. With high prices expected to ration demand, the 2021/22 global wheat and corn trade is forecast to fall short of earlier predictions, while uncertainties prevail for the 2022/23 season, it said. “The crisis has already sparked a number of policy responses in other countries, heightening fears about rising protectionism and the potentially adverse consequences for food insecure nations,” the IGC said. “Additionally, broader market turmoil and downside risks to global economic growth could also affect supply and demand dynamics, while rising crude oil and commodity prices may further fuel inflationary pressure.”

D’Amico Società di Navigazione’s dry cargo unit has no exposure or cargo commitments to Russia now, but it will evaluate client requests on a case-by-case basis, provided there is no sanctions breach. “We are extremely cautious,” says the next-generation of the Italian family-run business Emanuele d’Amico. He told Lloyd’s List that one of its bulkers had been due to load a grains cargo in Odessa, Ukraine, the day before the conflict broke out, but it turned away immediately without loading. The private company has its own crews and technical team and wanted to ensure their safety.

Europe is short of coal as it cuts its reliance on Russian energy following the Ukrainian invasion and it is questionable whether Indonesia, Australia or South Africa will be able to supply sufficient volumes to meet the continent’s needs. “If a European company asks to load an unsanctioned cargo, we will evaluate it, but it is a big issue and is problematic, and it will be a case-by-case decision,” he said.

The Russia-Ukraine conflict may turn out to be a positive for the dry bulk market as tonne-miles are more likely to increase, says the 33-year-old who was appointed as managing director in April last year, having joined the company in 2013. Congestion will also continue to support the market. “We are cautiously optimistic” about the short-to-medium term because of strong demand and low fleet growth, at less than 7%, he says from Monaco where he is based, adding that there is little prospect of new deliveries until end of 2024 or even 2025, as shipyards are filling up with containership orders. But there are always black swan events around the corner that could impact the market, he notes, adding that the biggest challenge is the changing trade patterns.

During the past 12 to 18 months, backhaul trades have been reaping more than fronthaul, especially on the geared segments, and how long that will last will depend on the strength in the container market. The company, founded by Mr d’Amico’s great-grandfather 90 years ago, has been involved in several project cargoes, with wood pulp coming back to bulkers as container lines were not able to meet requirements. His father Cesare is chief executive of the Rome-based group. Also, d’Amico is continuing its expertise in carrying forestry products (from South America to Europe), given that the first-ever trades in the 1930s were lumber shipped from Albania to Salerno, south of Naples.

Its core fleet consists of 17 owned vessels (post-panamax / kamsarmax, supramax and handy), and 30 long-term chartered-in bulkers, the majority of which have purchase options. It also has 15 vessels on short-term charters ranging from a single trip to up to 12 months. Mr d’Amico says he is happy with the size of the fleet as it gives flexibility, and the company can react quickly to market changes. “When we forecast the market may soften, we add coverage; on the other hand, when we feel it is oversold, we add tonnage,” he says, adding that the company has taken coverage on some of its core fleet — chartering out vessels for the next two to three years in the mid-$20,000s per day range. Meanwhile, the company has commercial teams in London, Singapore, and Monaco, and while some other dry bulk companies expand into Dubai, Mr d’Amico is content “where we are” although it is always considering options. “We are not pursuing volumes,” he says. “We focus on our counterparts and clients; we focus on each trade. I strongly believe in relationships; it is key. Shipping is the one industry where relationships matter.”

Mr d’Amico was mentored not by his father, but by the then-chief Lucio Bonaso, who passed away in February 2021. He recalls how he learnt a great deal from Mr Bonaso, who did not give special treatment because of the family name. Mr d’Amico also recalls how his father did not want him to join the company during the boom years of 2008 as he wanted his son to understand how to navigate through the tough times. “We’ve seen how tough shipping is,” he says. Still, he enjoys the job and would not want to be anywhere else.

Giant trader and charterer Trafigura is reported to have held talks with US investor Blackstone over a $3bn cash injection. Bloomberg and the Financial Times cited sources as saying the Swiss group wants to widen its sources of funding as the Ukraine war sends commodity prices sharply upwards. The sources added the discussions ended without a deal. New York’s Blackstone, the largest alternative asset manager in the world, is not commenting.

In a statement, Trafigura referred to the appointment in March last year of Khodor Mattar, a former executive at Singapore state investment company Temasek executive, to a new role as head of capital development. This was part of a longer-term strategy to diversify funding. “We have been building relationships with alternative providers of capital,” the company said. “We regularly engage with alternative capital providers on debt and equity opportunities across the business.”

Big traders rely on credit lines to fund deals, but financing requirements have grown as commodity prices have risen. A VLCC crude cargo costs almost $200m currently.

Trafigura has not appeared to have any trouble attracting bank financing in recent times. Earlier this month, the group clinched an over-subscribed refinancing to boost liquidity in volatile markets. The company said it closed new European multi-currency syndicated revolving credit facilities worth $5.295bn. The refinancing was targeting a total of $4.5bn but was “very well received by the bank market and closed substantially oversubscribed,” Trafigura added.

Trafigura is still dealing in Russian energy but has frozen investments in Russia following the invasion of Ukraine. In 2021, Trafigura generated net profit of $3.1bn, almost double the previous year’s $1.6bn. Last year, Blackstone pulled out of Eletson Gas after eight years. TradeWinds cited market sources as saying the New York asset manager sold its stake in the Greek LPG carrier owner to Toronto-based hedge fund Murchinson.

Ships are building up at important Chinese ports as China’s strict zero-Covid policy rattles supply chains once again. While Beijing has made contingencies to keep ports operating during Covid outbreaks, the same cannot be said of the thousands of factories that are having to down tools with workers told to head home for lockdown periods of seven days.

In total there are now around 40m Chinese in lockdown including almost every citizen in Shenzhen, home to the world’s fourth largest container port, as well as the entire province of Jilin in the far north of the country.

Currently there are 34 vessels off Shenzhen waiting to dock, compared to an average of seven a year ago, according to Refinitiv ship tracking data. At Qingdao, a northeastern Chinese port city, there are around 30 vessels waiting to dock compared to an average of seven last year. At the country’s two largest ports – Shanghai and Ningbo-Zhoushan – there has also been a notable build-up in ships at anchor in recent days.

In a customer update yesterday, Danish liner Maersk suggested that while ports in China continue to function normally, the problems lie on the landside with the strict Covid measures hampering trucking productivity.

“All things considered the impact, for now, is clearly not as large as last year,” commented Lars Jensen, the CEO of Vespucci Maritime yesterday via LinkedIn, referring to the summer of 2021 when Shenzhen port was partially closed for three weeks following another Covid outbreak. “Let us hope it does not get worse than this (but zero-tolerance and the Omicron variant is not a happy mix…),” Jensen added.

Overcooked commodity markets and the risk of a global economic slowdown are the biggest risks to Norden’s business this year, according to its chief executive. The Danish owner and operator of bulkers and product tankers has just posted its best annual result in 11 years and expects 2022 to be even better. Earlier this month, it said it expects its full-year profit to grow to between $210m and $280m this year, “based on good positioning and active trading in a continued strong and volatile dry cargo market”. Its CEO Jan Rindbo told TradeWinds that the company has much to feel confident about, but there are still plenty of unanswered questions about what lies ahead. “We’ve been through the pandemic, and we have been able to cope with huge volatility in the markets and still generated good results, so I’m confident that we can continue to do that here in 2022,” Rindbo said.

But the big risk remains a slowdown in world economic activity, he explained. “The concern here, of course, is that rising inflation and rising energy costs would eventually lead to a recession in the world economy — and that could disrupt demand. I think there’s a higher risk for that now than maybe a month ago. I think that’s just something to watch. So, we are saying that we have an expectation that the conflict based on how we see the situation today will be slightly negative for the dry cargo market,” Rindbo said. Norden, of course, expects the loss of export volumes of grain from Ukraine and the Black Sea this year, in the wake of conflict in the region that has shut down many ports. The US Department of Agriculture has cut its estimates for Russian wheat exports by 3 MMT and its expectations for Ukrainian exports by 4 MMT for 2022. “So, the question here, of course, is to what degree can other grain-exporting regions replace this volume out of the Black Sea?” Rindbo said. “That could provide some more seasonality in rates, it will potentially put more pressure on the other grain-loading regions — the port infrastructure, more waiting time. Then, of course, the question is will there be enough grain volumes to export from the other regions to replace the lost volume in the Black Sea and Sea volumes?”

Norden has had two vessels on charter that have been affected by the conflict. Any other vessels that were bound for Russia or Ukraine have been redirected, but Norden continues to call at other ports in the Black Sea, such as in Turkey. “In the trade of raw materials – commodities – Russia is more significant than Ukraine as well, so of course, we have Russian customers. If you look at our cargo volumes last year, for example, on dry cargo around 7% of our total volume was loaded in Russia. That clearly impacts both Norden, as well as trade flows. The Ukrainian and Russian grain exports are more than 15% of the total grain exports in the world, so it’s not an insignificant market.”

As TradeWinds has reported, Norden has decided not to take on new business in Russia. Rindbo said this was a moral decision, as well as a choice to avoid the riskier commercial environment. Uncertainty remains around making payments to Russian parties and how that will be affected by sanctions. Then there is the self-sanctioning action being taken by corporations around the world, which are not willing to buy Russian oil, for example. “That is having a significant impact now,” he said.

Norden recorded annual profit of $205m for 2021, its best earnings in 11 years. It is now contemplating a buyback of up to $50m of a $100m bond issue maturing in June 2024. The deal will be a “reverse Dutch auction”, in which bondholders are invited to provide a price they would be willing to accept for the debt. The board has also approved a share buyback worth up to $30m, to adjust the company’s capital structure. A maximum of 2.24m shares can be acquired up to the end of April.

The company last week announced that former Frontline chief executive Robert Hvide Macleod is joining its board.

A drop in fertilizer exports from the largest supplier Russia could dent demand for the sub-capesize segments. With bans on ammonium nitrate exports already in place since early last month, Russia has decided to suspend shipments of other fertilizers, according to reports. Russia is the second-largest exporter of potash, at about 12 MMT, or about a fifth of the market, followed closely by Belarus, according to fertilizer analyst and New Ag International editor-in-chief Luke Hutson. The only real alternative would be Canada, which is the largest producer, if it could find extra capacity, given that there are also sanctions on Belarus. Potash generally moves on panamaxes.

Urea is the next biggest export product from Russia, at about 6 MMT, or 14% of the market, although if supplies were restricted, the effect would be less severe, given the number of alternative producers, such as Qatar and Saudi Arabia and new production capacity in Brunei and Nigeria, he said.

Ammonium nitrate is more interesting, as it is not just agriculture, but mining that could be affected as the product is used in explosives, with Russian exports at about 3.5 MMT, or 40% of global trade. There is a big gap to the next largest exporter, Lithuania, so these tonnes would be harder to substitute, Mr Hutson added. Most of the explosive-grade is sent to African countries, but if supplies from Russia dropped to zero, South Africa may be able to supply some additional volumes to those markets, he said. Russia banned ammonium nitrate exports, prior to its invasion of Ukraine, to guarantee local supplies amid a global supply shortage due to high gas prices. Unseasonably warm temperatures in many parts of Russia brought the sowing season forward by several weeks, causing an early spike in demand for nitrogen fertilizers, which uses gas as feedstock, according to ship brokerage Braemar. The ban is reportedly in place from February 2 to April 1.

Russian fertilizer exports had increased by 34% to 16.8 MMT in 2021 compared with the previous year, predominantly shipped on geared vessels, it said in a note last month. China, Turkey, and Egypt have also put in place export curbs on mineral fertilizers such as urea, phosphate, and potash, it said, adding to the global shortage. The global fertilizer supply crunch will put pressure on future harvests as the planting season in Brazil and Europe for many crops is due to start in the coming months, it added.

While spot supramax rates slipped 1.2% to $31,913 per day at the close on the Baltic Exchange on Tuesday compared with the March 11 close, handysizes inched up 2% to $28,427 per day.

Meanwhile ammonia, which is mostly shipped on tankers as it comes in liquid form. will also be affected by the conflict in Ukraine with a reduction of 15% in seaborne shipments, after flows through the Togliatti-Odessa pipeline were stopped due to safety concerns, according to Kpler. While Russian ammonia through Estonia appear not to be affected for now, key buyers such as Morocco, Turkey and India will likely have to scramble for alternative sources to plug the shortfall. Russia and Trinidad are the biggest exporters, while Saudi Arabia and Indonesia are also significant, with Tunisia and Morocco being large recipients of Russian material, according to Mr Hutson. Ammonia is an important raw material in the production of phosphate fertilizers.

As bombs fall in Ukraine and geopolitical alarm bells ring, some observers of the market for secondhand bulkers are feeling dizzy. “Two weeks into the conflict in Eastern Europe and the secondhand market [displays] … an effect similar to that by an MC Escher illustration — a battle between what our logic is telling us should be happening and what we’re actually observing,” Doric Shipbrokers said in its latest weekly report. Others also note a disconnect between the heady sentiment around them and the more cautious approach they would normally expect. “The fact that the market is becoming numb to increasing geopolitical risks is … evident from the fresh purchase enquiries in the secondhand market,” Eva Tzima, head researcher at Seaborne Shipbrokers, said on 14 March.

These enquiries translate into bumper prices for owners such as Greece’s Michael Bodouroglou, who has found a good opportunity to part with his oldest bulker. According to market sources in Athens, Bodouroglou outfit Allseas Marine has agreed to offload the 58,800-dwt supramax Friendly Seas (built 2008) to Chinese interests for about $18.6m. That is far above the $17.2m and the $17.8m that Signal Ocean and VesselsValue estimate the Tsuneishi Zhoushan-built vessel is worth. Allseas, an owner of bulkers and container ships, is a regular buyer and seller of vessels with a keen eye out for opportunities to renew its fleet.

Robust sale-and-purchase activity is likely to last as volatility creates expectations of shifting trading patterns. “All in all, it will take some time before we see the current turmoil in Europe affecting overall market momentum,” Allied Research noted on 14 March. Vessel sizes bigger than supramaxes are seeing quite a bit of action as well. Greece’s Nicholas G Moundreas group is spending an unidentified amount on the 82,500-dwt kamsarmax Oceanic (built 2007). Greek peer Unisea, the Oceanic’s current owner, was reported selling the same ship in March last year for about $16m. Maritime Strategies International puts its value in the current quarter at between $16.9m and $19.5m. Even buyers bailing out of a deal as they get cold feet over Ukraine see others gladly take their place. The 81,800-dwt BW Rye (built 2019) was committed earlier this month for $37.5m to a Greek owner who backed out of the purchase because of some exposure to Ukraine. According to ship management sources in Athens, another Greek player, Neda Maritime, is stepping in to buy the vessel now at the same price.

Things are a little more complicated with capesizes. Interest for such big vessels is there as well, but buyers are more circumspect, given the relative performance of freight earnings and secondhand values in that size. In the only capesize deal reported recently, Cara Shipping is said to be in ongoing talks to divest the 180,400-dwt Stella Anita (built 2012) to Greek or Chinese buyers for between $29m and $30.5m. Cara Shipping sold six capesizes and ore carriers last year, as TradeWinds reported. In February, a seventh, the 180,000-dwt Stella Hope (built 2016), was widely reported sold to Zodiac Maritime. TradeWinds, however, understands that this deal has not gone ahead and that talks to sell the ship continue.

The number of Covid-19 cases continue to accelerate across China leading to more lockdowns, greater stock market volatility at the nation’s bourses and reduced factory output. On Tuesday authorities in Langfang city which borders the capital Beijing, as well as Dongguan in the southern province of Guangdong, also imposed immediate seven-day lockdowns joining the likes of Shenzhen city and the entire province of Jilin in complete lockdown in keeping with the government’s strict zero-Covid policy.

Covid cases doubled in the past 24 hours across the nation with plenty of attention turning to Shanghai where 106 flights have been diverted, children are back to online schooling and some lighter lockdown measures are in place. In Shenzhen, the ports are still operating, while the vast majority of the city’s 17.5m population have been told to stay at home through to next Sunday.

Shenzhen is home to the fourth largest container port in the world. A similar Covid incident last year saw throughput nosedive by around three-quarters for a three-week period leading to massive snarl-ups at gateway ports in Europe and North America when the facilities eventually reopened. Currently, operations at DaChan Bay Terminals to the west of Shenzhen remain normal according to a spokesperson, as there have been special arrangements made for frontline staff. At Yantian, to the east of the city, home to the largest Shenzhen terminals, a spokesperson for Hutchison Ports said operations are continuing normally also. “Since the strengthening of epidemic prevention policy in Shenzhen, Yantian has been maintaining normal and smooth operations. At present, all operations in Yantian and surrounding trailer business are operating normally,” the spokesperson told Splash.

Sunny Ho, who heads up the Hong Kong Shippers’ Council, said that while Shenzhen terminal operators report operations as normal, the main cargo consolidation centres and warehouses in Shenzhen have suspended operations, although smaller warehouses and cargo collection points outside Shenzhen still function as normal. “Factories are mostly outside Shenzhen and loading of export goods can still be performed, but road traffic has reduced substantially and container haulage will be affected significantly as well,” Ho told Splash.

With reduced workforces and limited truck availability, ship queues – not just for container vessels – are also beginning to manifest at many key Chinese ports this week including Shanghai, Ningbo-Zhoushan and Qingdao.