What is the impact of the zero-tolerance coronavirus policy in China?

30 August 2021

Halfway through August, the port authorities at Ningbo stated the Meishan container terminal was to be closed. This was not the first time an important terminal in China decided to implement a closure effective immediately. In all cases, the cause was just a single positive person. This is because China maintains a so-called zero-tolerance policy. What impact does this policy have on import from China? And what are the consequences for carriers?

Abrupt closure of container terminals

As a result of merely a single positive case in a port operative, Ningbo decided to halt activities at de Meishan terminal immediately. To everyone’s surprise, this meant absolutely no more maritime traffic to and from this terminal from Thursday 12 August. A similar situation occurred earlier this year in the Shenzhen port area, and at Shanghai airport at the end of this month.

The ports of Ningbo, Yantian and Shanghai are all among the largest and most important ports in China. It is obvious that these closures have a huge impact on global trade. This includes global delays, cancelled sailings, and higher tariffs. So why does China nonetheless decide to batten down the hatches after such a relatively small incident?

The zero-tolerance coronavirus policy

The ever intensifying coronavirus takes its toll across the world. By now, people in Europe are used to live by the rules and (travel) restrictions as part of this pandemic. Our aim is to keep everything running as much as possible, despite the existing infection rate. In contrast, the Chinese authorities have opted for a different approach.

China operates on the principle of a zero-tolerance policy. This means a single positive case will cause all work to be halted in order to prevent further infection. Then, coronavirus tests are carried out on a massive scale. Only when the test results show that not a single additional positive case has occurred, activities are carefully resumed.

Consequences for carriers

The rigorous nature of a terminal closure causes massive processing backlogs in no time. It also immediately and severely affects all consignments to and from the port in question. For instance, some shipping companies choose to bypass the port to prevent further delays. A quick calculation shows that the 8-day closure in Ningbo stopped 70,000 TEUs from being processed. This backlog will be squared away after reopening, but this will take weeks at least.

In short, the closure of terminals is causing massive problems for carriers. The high tariffs and long lead times are under even more pressure. The already overstretched container market now has to deal with the aftermath of the terminal closures on top of congestion, delayed processing in Rotterdam, blank sailings and the upcoming Golden Week in October.

We will undoubtedly be confronted with more incidents like this. This is why we are asking our carriers to take these unexpected setbacks into account.

If you have any questions after reading this article, or if you want to know more about the latest developments in the current market, please do not hesitate to contact your regular point of contact at Ritra Cargo.