Risk management company Russell Group has warned that Covid-driven delays at the Chinese ports of Guangzhou, Yantian, Shenzhen, Shekou and Nansha will impact the exporting of integrated circuit boards (ICB) worth over $40 billion.
The rise in cases has been concentrated in Southern China, which is where China’s manufacturing and technology heartland is based.
Analysts from the company have compared this incident to the disruption to the Suez Canal blockage in March of this year.
Although it took about several weeks for ship schedules and supply chains to return to normal after the Suez disruption, analysts are saying that it may take months for the disruption in Southern China to return to normal.
In a statement on the disruption, Maersk said that this “trend is worrying, and unceasing congestion is becoming a global problem”, noting that due to COVID-19 and a rise in the volume of trade, “terminals are becoming global bottlenecks and that it continues throughout the logistics chain too.”
The slowdown in trade started with a rise in COVID cases in Yantian, forcing many carriers to divert their ships to other ports such as Guangzhou, Yantian, Shenzhen, Shekou and Nansha, resulting in some of Southern China’s major ports all facing a backlog of shipments.
As the analysts at Russell Group have revealed, the disruption has had a large knock on effect for global trade, as key commodities from ICBs to people carriers faced large delays in being transported.
Suki Basi, Russell Group’s Managing Director, commented: “The current disruption in China, just like the Suez Canal disruption, once again reinforces the vulnerability of global trade and in turn the supply chains that organisations rely upon.
“Over the last few years, as trade has increased, key ports are becoming potential single points of failures or “bottle necks” where trade is funnelled through.
“From a risk perspective, what we are also seeing here is a dangerous level of port accumulation, which should be a cause for concern for marine underwriters.
“What is required is greater data-led insights that can show organisations and their re/insurers, where their levels of exposures are and how they can take the appropriate risk mitigation steps to contain the fallout from events.
“This analysis has been made possible by our Insight-led ALPS Marine technology, which blends together industrial data and technical expertise to provide decision-support for risk managers and underwriters.”
