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Yantian Commercial Port Closure – Serious Impact on Global Supply Chains – eCommerce Magazine

The partial closure of Yantian affected more containers than the blockade in the Egyptian shipping canal. That is one of the central results of a current one BME survey among 166 German companies, 104 of which are directly active in China.

10% of Chinese exports at the port of Yantian

“At the beginning of our survey, which we started at the end of June, the port of Yantian was not yet fully operational again,” shared BME-Chairman Gundula Ullah on Wednesday in Eschborn. The local administration ordered quarantine measures and corona-related business closings from May 21. Since then, some of the berths and cranes have not been available for around a month. At times, more than 130 container ships were jammed in front of the harbor. “In the meantime, only 40 percent of the usual container volume has been shipped via Yantian,” Ms. Ullah informed.

Especially for the technology and electronics industry, the delays and impairments that have occurred in the meantime in container loading are a problem. Around 90 percent of all electronics exports from the People’s Republic normally go through the port of Yantian. The city accounts for around ten percent of Chinese exports. With deliveries of goods valued at over US $ 700 billion, Guangdong Province is by far the largest export region in the country.

Since only the ports in Shanghai, Ningbo and Singapore load more containers per year than Yantian worldwide, the delays that have now occurred could seriously affect global supply chains and supplier structures. However, the southern Chinese port – it connects the industrial metropolis of Shenzhen with other countries – fully resumed its loading activities at the beginning of July.

40,000 TEU containers a day on Yantian International Container Terminal

The Yantian International Container Terminal (YICT) processes – almost like before the outbreak of the Corona crisis – around 40,000 TEU containers a day and is thus close to full capacity. “However, the companies we surveyed expect that the full commissioning of the port will also lead to long-term impairments. The expected disruptions lasting several weeks should continue until the logistics function largely smoothly again, ”emphasized Riccardo Kurto, the BME’s China representative.

The 104 German companies in China also surveyed by the BME appear to be affected, but not to the same extent as the 62 companies based in Germany. However, they also assume that the partial closure of the port will have a negative impact on internal work processes in the medium term.

The almost four-week impairment of the loading work in the port of Yantian could, according to Kurto, also mean a downward spiral for neighboring ports. This would then particularly affect the ports in Nansha and Shekhou in nearby Guangzhou. However, the BME office in China points out in this context that both ports mentioned are currently working at their capacity limits at full capacity.

Minimize the risk of failure with the help of suppliers in additional markets

The BME survey also gave answers on the concrete effects of the situation in Yantian on the business activities of German companies. Almost 30 percent fear a continuing shortage of containers and 57 percent higher freight and logistics costs. Almost two thirds of the German companies surveyed expect freight capacity bottlenecks. Rescheduling freight routes is an issue for 50 percent. 29 percent and 50 percent of those surveyed expect production bottlenecks and delayed deliveries to and from China.

“As at the beginning of the COVID-19 pandemic, we recommend that our members establish suitable suppliers in additional markets and regions in the medium and long term. This is the best way to mitigate the risk of failure or delivery delays, ”said Kurto. Some changes could also be initiated in the Chinese procurement market. The BME office in Shanghai supports its members via the Sino-European Procurement Platform (SEPP) in identifying and developing new suppliers in southwest China. This is a cooperation project between the BME, the province of Sichuan and the cities of Chengdu and Pujiang.

The BME office in Shanghai can also provide first-hand information and provide German companies with local assessments of further developments in Asia’s largest economy. “Local contact in particular can be of great advantage in dynamic developments like the one currently in China,” added Kurto in conclusion.

Also read: Freight – Transport offers exceed values ​​before pandemic outbreak.