California port authorities anticipate renewed shipping congestion in the summer in the wake of Shanghai ending its two-month-long COVID-19 lockdown.
“We will have some form of a surge, given the delay of cargo volume from Shanghai and China overall,” said Mario Cordero, executive director of the Port of Long Beach, to Reuters. “To what extent that surge will be remains to be seen.”
U.S. ports on the West Coast had suffered labor shortages and supply disruptions throughout the pandemic.
The Shanghai lockdown eased logistical bottlenecks over the last two months by reducing the number of commodities coming in.
Chinese authorities lifted the lockdown on June 1, resurrecting one of Asia’s most populated and economically productive cities and reopening its busiest shipping port.
Assessing the likelihood of renewed bottlenecks, Goldman Sachs analyst Jordan Alliger said, “Given the fact that the reopening in Shanghai only recently took hold, we still expect several weeks of [logistical] easing before any potential goods influx. Said another way, June metrics will likely portend fewer bottlenecks while July/August could see some rearing up, especially if current longshore labor contract negotiations start to impact port productivity in tandem.”
It remains to be seen whether West Coast ports will be overwhelmed by a flood of Chinese goods, compounding existing labor shortages and causing massive delays in the delivery of commodities.
The Chinese government’s commitment to a “zero-COVID” strategy continues to stand in the way of any normalization of global shipping.
Strict lockdowns of major commercial and industrial hubs in China disrupted global supply chains and led to significant freight pileups worldwide.
The coming “tsunami of deferred cargo” from Shanghai may be the biggest yet.
