28th March: Shanghai lockdown in two waves

After recording its highest daily number of cases on Saturday, with Omicron leading a spike, Shanghai, China’s most populous city and a global financial hub, will be locked down in two stages over nine days while authorities carry out infection testing.

Authorities had so far resisted locking down the city of some 25 million people to avoid destabilising the economy and while case numbers are not high by some international standards, authorities have decided to take action.

The lockdown will happen in two stages, with the eastern side of the city under restrictions from today until the 1st April and the western side from the 1st to 5th April. The staggered approach to this lockdown means half the city will remain functioning at a time.

Public transport will be suspended and firms and factories must halt operations or work remotely and all residents will be subject to mass city-wide Covid testing.

Shanghai’s container ports and airport will remain open, although staff levels and COVID-safe working practices mean there will be an impact on terminal operations, collections, deliveries and handling efficiency.

Airlines are reviewing the situation and some further cancellations are likely. Expect air freight to use other regional airports and a general rate rise from other major gateways. Diverting cargo to other airports is typically more expensive, for trucking and air freight and adds time to overall transit. Any air cargo received or available at Pudong Cargo Centre will be processed but currently, as we understand, new shipments will not be accepted for export.

For full load containers (FCL), there is a green channel set up for trucks to move to port/Pudong, which requires the driver to provide a COVID negative testing report within 48 hours. 

And while it means that our FCL traffic can continue in the short term, locating drivers will get increasingly challenging, as restrictions from surrounding cities on drivers and especially from Shanghai regions will lead to continued and escalating trucking problems. This will in fact affect all modes of service and not just FCL export freight.

LCL operations are not possible at this time and we have, reluctantly, had to hold this week’s service as warehouses in Shanghai are currently not allowed to be staffed or operate.

Our local offices are working from home and keeping us informed of the changing situation, while minimising any impact on our customers and smoothing shipments, as much as possible.

The lockdown will result in a demand slow-down in the short term, followed by a surge and upwards pressure. And the disruption is on top of the Shenzhen lockdown from the last few weeks.

Many factories in the Shanghai area will also be forced to close production over this period. The result is  that if product cannot be made it cannot be shipped and cancellations are expected over the coming days and weeks.

Currently the biggest impact would seem to be on inland transport, with the first/final mile element of the supply chain, due to internal city and provincial restrictions.

Please be aware that although this is specific to Shanghai in today’s announcement, there are also many other areas and regions being impacted with similar lockdowns and difficulties – Shanghai is only the latest city to be effected.

Inbound shipments into Shanghai and the areas that are currently under lockdown restrictions throughout China are also being severely compromised both at arrival ports and airports.

NOTE – 4-5th April is Qingming Festival and Tomb Sweeping Day public holidays. All offices and many factories in China are closed at this time. Adding further pressure on an already challenging environment in China.