COVID dominoes fall in China; air and sea shipments delayed

(UPDATED Jan. 11, 8:50 a.m. ET)

Import and export operations in Tianjin are slowing after a small cluster of COVID cases was discovered over the weekend, according to third-party logistics providers in China. Meanwhile, in Shenzhen, authorities are blaming a contaminated import shipment infecting a cargo worker, who then spread the virus to three other people.

The news comes as China reinforces its zero-tolerance policy toward COVID in the weeks leading up to the Beijing Olympics that begin Feb. 4. Shipping companies are feeling the knock-on effects.

Authorities in the port city of Tianjin instituted a tiered system of lockdowns and are testing all 14 million residents, state broadcaster CCTV said, according to The Associated Press. In certain areas of the city, people are not allowed to leave their homes at all. In control zones, one family member is permitted to leave to buy groceries every other day, and in prevention areas people must remain in their neighborhoods.

The Port of Tianjin and the airport have suspended pickup operations for all import containers, freight management companies said in client advisories Monday. Seko Logistics said increased nasal swab testing of port and airport staff is causing delivery delays and more government restrictions could be forthcoming. Marine terminals at the port are operating normally, but inbound gates have reduced hours, and all truck drivers are required to register for access to the port after clearing their own health tests, according to Seko and global freight broker C.H. Robinson (NASDAQ: CHRW).

Beijing Airport is operating normally, but truck deliveries from Tianjin are restricted, Minneapolis-based C.H. Robinson said. Some factories are rejecting trucks from Tianjin, Seko reported.

Beijing is about 70 miles northwest of Tianjin and easily reached by car or high-speed train. The Beijing Center for Disease Prevention and Control on Sunday advised Beijing residents not to visit Tianjin and those in Tianjin to refrain from traveling to the capital. It also asked commuters between the two cities to work from home. By Sunday evening, train tickets from Tianjin to Beijing could no longer be purchased online, CNN reported.

Authorities in Hebei province have also suspended inbound and outbound trucking service to protect against spreading COVID, C.H. Robinson said.

Residents of Xi’an and Yuzhou, two cities further from Beijing, are also confined to their homes. Xi’an, with 13 million residents, has been under lockdown for two weeks, but there were only 15 cases on Monday, the AP reported. The airport in Xi’an remains closed, and rail and road freight is prohibited, Seko Logistics added. The closure is causing spillover congestion at nearby Chengdu airport, the Chicago-based freight company said.

For perspective, on Sunday there were more than 363,000 new COVID cases in the U.S., according to the Centers for Disease Control and Prevention.

Meanwhile, authorities in Shenzhen said Monday it is “highly likely” that a small cluster of cases originated with a worker who was exposed to a contaminated shipment from overseas, according to English-language Chinese news outlets.

Officials said the infection was detected during routine screening of employees in key industries and that four people were discovered with the delta variant. Officials have begun testing everyone in the city of 22 million people, closed some public venues and told residents not to leave the city unless necessary. Seko Logistics said a nucleic acid test report is required within 48 hours of entering or exiting the airport and port of Shenzhen.

It is unclear whether authorities will tighten procedures for handling import cargo because of the suspected contamination. The scientific consensus now is that COVID is primarily spread in aerosolized form through the air, and that there is low transmission risk through surface contact. Nonetheless, ground handlers at Chinese airports are required to spray containers with disinfectant and leave them outdoors for a period of time before unloading them, logistics industry specialists say.

Freight transportation companies and shippers fear labor shortages due to COVID outbreaks and precautionary measures will lead to a continuation of supply chain disruptions in 2022, with the omicron variant spreading rapidly and the possibility of new variants popping up.

Those worries are already a reality just 10 days into the new year.

Trucking operations at the Port of Ningbo slowed last week after health authorities imposed testing requirements on drivers and forced factories to close. Lower productivity circulating containers could eventually cause vessel delays. After several days with revised operations, container gate-in and gate-out activities are now also back to normal with a combined yard density of around 75%, shipping line Maersk said. However, trucking services in Jinhua Yongkang, the mid-high-risk area in the Beilun factory district and the area outside the Zhejiang province, are suspended under the strict regulation by the epidemic prevention policy, it said.

Hong Kong-based airline Cathay Pacific has scaled back by two-thirds all-cargo flights because of strict quarantine restrictions for pilots, while the city has banned flights from eight countries, including the U.S., for two weeks.

In Zhengzhou, hundreds of thousands of workers at iPhone maker Foxconn’s facilities and Huawei’s research campus in Dongguan are being tested as more COVID cases appear. Zhengzhou is an air cargo hub and restrictions there could cause “massive” issues for shippers, Seko Logistics warned.

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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