Brace for Christmas price hikes, JMEA warns

The worsening congestion at Chinese ports is further jolting local and regional manufacturers and exporters who are gearing up for shipments for the Christmas season.

Manufacturers and exporters across the region have been hit with news of further congestion at the ports in China with reports coming that the world’s biggest shipping lines — including AP Moller-Maersk and CMA CGM SA — are diverting shipments to other ports rather than wait outside Ningbo, China, for an unknown length of time while the COVID-19 outbreak continues there.

A Maersk cargo ship transports containers. Large global shipping lines are redirecting shipments to other ports rather than wait outside Ningbo, China, for an unknown length of time while the COVID-19 outbreak continues there. (Photo: Twitter @LLoydsLoading)

The partial closure of the world’s third-busiest container port is worsening congestion at other major Chinese ports, as ships divert from Ningbo amid uncertainty over how long virus control measures in the city will last. In nearby Shanghai and in Hong Kong, congestion is once again increasing after dropping due to the reopening of Yantian port in Shenzhen, which was closed in May for a separate outbreak.

Jamaica Manufacturers and Exporters Association (JMEA) President John Mahfood has declared that this latest state of affairs is not good for manufacturers and exporters in the region, who are already suffering from global logistical challenges in addition to higher shipping costs. With this congestion happening in mid-August, he said it can have an effect on manufacturers for Christmas because those containers for use would have been expected to arrive late September for shipment in October.

President of the Jamaica Manufacturers and Exporters Association John Mahfood (Photo: Jamaica Observer)

“Probably where there will be a problem is for consumer goods that are being brought in from the Far East, where importers are expecting them to arrive in late September-early October for the Christmas season, there will be some shortages,” Mahfood declared.

He told Caribbean Business Report that if there is a shortage it will not be detrimental, particularly as it regards food items, which comes mostly from North America and Europe, which is not as badly affected in shipping.

According to Mahfood, “It is an ongoing problem and the increased costs is affecting consumers. Inflation rates are going up and, of course, the economy is in a weak situation; so it’s going be tough for consumers this Christmas.”

He lamented that the continuing congestion on the ports in China is a recurring problem for manufacturers and exporters in the Caribbean, having surfaced earlier in the year when the American economy started to pick up because of the high vaccination rates and higher demand in the economy. He pointed out that at the same time demand was picking up, there was a shortage of vessels and a shortage of containers, so all throughout the year vessels have been
short and goods have missed shipments. To compensate, he explained, manufacturers and exporters have been stocking up on raw materials.

The ZIM Integrated Shipping Services Ltd Chicago container ship sails out of the Yangshan Deepwater Port in this aerial photograph taken in Shanghai, China, on Monday, March 23, 2020. Since Tuesday, 141 ships have docked in a shared anchorage for the Shanghai and Ningbo ports (Photo: Qilai Shen/Bloomberg)

The number of container ships anchored off Xiamen on China’s south-east coast rose to 24 on Tuesday based on shipping data compiled by Bloomberg. The Meishan terminal at Ningbo port was shut last week after a dock worker became infected with the Delta variant of the novel coronavirus.

The terminal accounts for about a quarter of the port’s capacity. Local authorities were expected to “reassess” the resumption of operations at the Meishan terminal on Wednesday.

If a phased reopening begins this week to tackle the backlog, a full resumption of operations may be possible by the beginning of September, logistics intelligence provider project44 reported. Some other ships are willing to wait, with 141 ships at a shared anchorage for the Shanghai and Ningbo ports Tuesday, 60 more than the median number from April to August.

“We hear the backlog is getting bigger and the congestion is getting worse,” said Dawn Tiura, CEO of logistics industry association Sourcing Industry Group.

She suggested, “if you are buying goods that originate or move through China, you need to increase lead times or find another source of supply.”

In this 2013 photo, Sourcing Industry Group’s President and CEO Dawn Tiura kicked off the organisation’s Spring Global Sourcing Summit at the Omni Amelia Island Plantation in Amelia Island, Florida, USA. (Photo: SDC EXEC)

The shipping industry has been plagued by disruptions this year that have created delays in global shipping chains and driven freight rates to record highs. Snarls have ranged from a mega-ship stuck in the Suez Canal in March to virus outbreaks in Southeast Asia and China reducing productivity at ports.

The backlog has stretched across the Pacific Ocean to Long Beach port in Los Angeles, where more than 30 ships were waiting to get into port to offload, Bloomberg’s data show. Elsewhere in South-East Asia, anchored ships off Vietnam’s two largest ports rose to six above the median.

One source reported that most ports are already experiencing congestion or delays, so any additional and uncatered for volumes will heap on more pressure.