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Affected by global ports congestion, supply chain will face huge challenges

Global supply chain problems appear set to worsen as the Russian-Ukrainian conflict, coronavirus-induced lockdown and some other pressures have resulted in longer port delays and higher costs, according to a new report from Royal Bank of Canada (RBC) on Tuesday. Research by RBC analysts found that a fifth of the world's container ships are currently stuck in congestion at major ports, with ships waiting outside East China ports up 34% over the past month.


It is reported that Maersk CEO Soren Skou said at the quarterly earnings conference that the Shanghai port has remained open and operating, trucking and warehouse closures have slowed development to a certain extent, and our export volume in China has been affected, but probably more than ours. Expected to be smaller.



Matt Cox, CEO of Matson, reported at the earnings conference on Tuesday: "The impact of the lockdown on Matson's business in China is minimal. Our terminals are receiving cargo and managing empty containers, and our ships are leaving Ningbo and Shanghai on time." Matt Cox said , some customers have shifted their origin from Shanghai to neighboring Ningbo. Several other carriers have also cancelled Shanghai calls and moved to other ports, some to Ningbo, some to Busan or other Asian origin ports, and reallocated capacity to other markets.




Matson said in its first-quarter earnings report this year that on the trans-Pacific route, it sees challenges in China’s supply chain, mainly due to measures taken to slow the spread of the epidemic, as well as continued supply chain restrictions and congestion in West America, rising consumption trends and Inventory replenishment. Despite the near-term uncertainty brought about by supply chain challenges in China, the company expects current supply and demand factors to remain largely unchanged through at least the peak season in October, and expects demand for its China services to be sluggish for most of the year continue to rise.




Matt Cox expects delayed cargo to enter the trans-Pacific route when China's blockade eases and lead to another increase in ships waiting outside the Port of Los Angeles/Long Beach. "Some of our customers have indicated that they have significant production backlogs due to recent supply chain challenges, with freight bookings of about a few months. This will take time to resolve, especially as this will coincide with the traditional summer peak season."









In addition, data from project44 reported that the average wait time for export containers at the port of Shanghai to destinations such as the US actually decreased during the lockdown. In the last week of April, the metric fell 43% year-on-year to 2.02 days. Wait times for imported containers increased during the lockdown (due to insufficient inland trucking), but the metric fell 15% in the last week of April from the previous week to 10.75 days.