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Explained: How will the Ningbo port shutdown in China impact global trade?

The Meishan terminal at Ningbo-Zhoushan port has halted operations after a worker tested positive for Covid-19. What is the potential impact of the closure, and how will it impact global trade?

Written by Pranav Mukul , Edited by Explained Desk | New Delhi |
Updated: August 18, 2021 8:57:12 am
Containers sit stacked next to gantry cranes as trucks operate at the Port of Ningbo-Zhoushan in Ningbo, China. (Bloomberg Photo: Qilai Shen)

In what could potentially threaten global supply chains and impact maritime trade, China has partially shut down the world’s third-busiest container port after a worker there tested positive for Covid-19. The Meishan terminal at Ningbo-Zhoushan port, which is south of Shanghai, accounts for over a fourth of the container cargo handled at the Chinese port.

What happened at the port?

According to the South China Morning Post, a 34-year-old worker, who had been fully vaccinated with two doses of the Sinovac vaccine, tested positive for Covid-19. He was asymptomatic. Following this, port authorities locked down the terminal area and the bonded warehouse, and suspended operations at the terminal indefinitely.

Given the rest of the port is still functional, the traffic meant for Meishan is being redirected to other terminals.

What is the potential impact of the closure?

Despite the diversion of shipments to other terminals, experts are anticipating a backlog of consignments with average wait times being expected to rise.

In May, port authorities at the Shenzhen’s Yantian port in China had similarly shut down operations to contain the spread of Covid-19. The wait time back then had increased to around nine days.

The South China Morning Post reported that the Meishan terminal mainly services trade destinations in North America and Europe. In 2020, it handled 5,440,400 TEUs of containers.

During the first half of 2021, the Ningbo-Zhoushan Port handled the most cargo among all Chinese ports, at 623 million tonnes.

How is it likely to affect global trade?

In the aftermath of Covid-19, global supply chains have remained fragile mainly on account of closures and lockdowns that affected both the manufacturing and the logistical segments of the chain. This has not only resulted in a growing backlog of shipments, but has also caused freight charges to go up as demand outgrew the supply.

An extended closure of one of the biggest terminals at the third-busiest port in the world could further exacerbate the stress in global trade.

Bloomberg reported, quoting Ningbo’s Customs Bureau, that the biggest exports through Ningbo port in the first half of this year were electronic goods, textiles and low- and high-end manufactured goods. The top imports included crude oil, electronics, raw chemicals and agricultural products.

The slowdown in maritime trade was also a key contributing factor in the global chip-shortage, that is affecting several industries.

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