We are at another critical juncture in the COVID pandemic where the truth of trade and government rhetoric come head-to-head. No matter what Chinese officials are saying, the situation at the critical Port of Yantian is getting worse.

Chinese officials are sending a message of reassurance, citing that most of the COVID cases are not in Yantian but in the surrounding areas. Then came the report of an increase in the number of COVID-19 infections, with around 50 reported for the week to June 2, mainly in the Yantian district. 

Yet, manpower at the port terminal is down by 70% because of all the COVID quarantine restrictions and mass testing. All the major carriers are characterizing this situation as “deteriorating” because of the increase in COVID cases. 

No matter the rhetoric, the unvarnished truth is it takes people to move trade.

Carriers continue to increase the number of days they say are needed to clear up the congestion at the ports. We are now at 14 days. Only the eastern portion of the terminal is operating, at 30%. The western portion of the terminal is still closed.

Blank sailings and diverted routes have been announced, but that will only create logjams at the other ports, further compounding the container crunch.

The impact of the lack of people working at the terminal is clearly present in the trade data.

“The median time at the port now is now 2.3 days,” said Fotini Tseroni, analyst at MarineTraffic. “The waiting time in early May was around one day. In April, it was less than a day.”

At last check, MarineTraffic AIS data had 41 cargo vessels currently at anchor with destination port Yantian — nine in ballast, 20 partially laden, 10 laden and two not applicable.

According to a number of sources, approximately 20,000 containers are backed up as a result of this slowdown due to COVID.

Jon Monroe of Jon Monroe Consulting is warning customers not to listen to rhetoric and instead use common sense in understanding the herculean task that lies ahead in unclogging this congestion.

Writes Monroe:

“The port has been working at 30% of the normal operating level. Does this mean that each week, YICT [Yantian International Container Terminals] will have a backlog of 70% of expected containers? Even with re-routing containers to the other two ports, it will no doubt create backlogs in those ports. 

“We are seeing quite a few containers being diverted from Yantian to Nansha. At a price, of course. Drayage rates have doubled and finding truckers is becoming increasingly more difficult. Longer wait times at terminals in S. China has increased the dray cost and decreased the availability of truckers. This is also negatively impacting the equipment problems as inbound vessels bypass Yantian for other terminals.

“Though officials say the problems at YICT will be resolved in a matter of days, we don’t think so. This bottleneck at one of China’s major export gateways will be troublesome into July. Count on it.”

Dafna Farkas of Freightos says those shippers who are able to divert export shipments to other ports serving Shenzhen — like Shekou — will pay a steep price.

“The actual cost to many shippers will be much higher than the spot rate in the form of space and equipment premiums,” Farkas explained. “The new backlog created in Yantian and the disruption to ocean services and added volumes to alternate nearby ports will likely bring additional pressure on rates and exacerbate the equipment shortage already plaguing the industry.”

Eytan Buchman, CMO of Freightos, added, “It’s hard to say given how rapid these fluctuations are taking place and how despite best efforts, capacity is still under a major crunch. Just two weeks ago, I saw one case where shipping a full container cost over $14,000 — compare that to just over $2,000 just two years back. 

“The bottom line is that we are in a completely unprecedented, slow burn capacity crunch … and we’re not even in full-fledged peak season yet. Much like in air cargo in March and April of 2020, prices are baselines, but given the massive crunch, every individual shipment has the potential to deteriorate into an effective bidding war.”

The agnostic flow of trade is the beacon of truth in this developing story. Containers don’t lie.