Recent COVID-19 outbreak in Asia leads to more pressure on supply chains

31 May 2021

A new wave of the COVID-19 virus has flared up in Asia over the last few weeks. Most cases have occurred in large production hubs, including Shenzhen. This could cause major issues for forwarders once again. There will be renewed pressure on the current lead times and tariffs – in a container market that is already overstretched. We would like to let you know what you should take into account.

New coronavirus outbreak in Asia

South China, South Korea, Taiwan, and Vietnam are included in the Asian producer countries that reported a new COVID outbreak in recent weeks. Goods produced in these countries are mainly sent to Europe and the United States.

The Vietnamese authorities have already put in place a temporary closure of four business parks in the northern province of Bắc Giang due to a resurgence of COVID. New cases were also discovered in Shenzhen (China) a few days ago. This area is now subject to increased checks and mandatory coronavirus tests for all visitors to the port, including truck drivers. This is causing a strain on the affected port area, resulting in major delays in goods delivery and/or unloading.

Problems are piling up

The new outbreak of COVID-19 comes in addition to the persisting, existing problems such as capacity shortages, congestion, and blank sailings. There is now also a shortage of available rail cargo space.

Due to the explosive growth of the number of trains to and from China, the terminals in Brest-Malaszewicze are now congested. This is because there is no subsidy for other border crossings into Western Europe from China. This means train companies are more or less forced to use this border crossing.

In combination with incidents such as the blockage in the Suez Canal and temporary closures of ports dealing with COVID-19 outbreaks, this is causing great concerns among economists. It is feared this will further incense the harassed global economy.

Consequences for transport tariffs from Asia

These new developments are clearly not helping the current market. It is expected that the tariffs in June will reach the highest levels in modern history.

A previously published article from the Nieuwsblad Transport on 26 May hows us there are fears that even future tariffs will not go down to pre-coronavirus levels in 2018/2019. It seems that future cargo prices will be fundamentally higher. This ‘new normal’ is estimated at 50% above the level it was at before the coronavirus crisis.

Please be assured that Ritra Cargo is in close contact with its agents about the new and intensifying wave of the coronavirus. It goes without saying that we will make sure all affected shipping agents have up to date information.

However, if you have any questions related to the developments in the current market, please do not hesitate to contact your regular point of contact at Ritra Cargo.