The near-term outlook We are in the middle of the peak season and a demand slow-down is unlikely to happen as shippers are anxious to get their goods moved. On the aspect of bottlenecks the overriding risk right now is the development of the new wave of the pandemic in China. The partial shut-down in Yantian a month ago led to ripple effects and shortages still felt in the market and was caused by just a few cases of Covid in South China, hereof some amongst port workers. Over the past 1½ weeks there has been an increase across China in locally transmitted cases of the Delta variant leading to increased amounts of localized restrictions and shut-downs. As of the morning of August 11 th a port worker in Ningbo was tested positive. In the best case this is an isolated case and will not spread and the overall new wave in China is under control and slowly burns itself out. In that case the supply chain problems will not worsen. In the worst case – and that is a scenario which unfortunately is realistic – we will see partial shutdown of operations in Ningbo similar to the Yantian incident. This will have much larger ramifications than Yantian. Ningbo is a much larger port than Yantian, this would happen in the middle of the peak demand and it would likely spur exporters in the Ningbo region to try to move their cargo to Shanghai leading to severe road congestion in the region as well as likely severe congestion problems in Shanghai as well. This is not a positive outlook, unfortunately, however shippers need to assess the current market risks and be clear on what their contingency plans are in case the situation escalates further.
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