Economy: Ship jams in Shanghai drive up prices in Germany too

Economy
Ship jams in Shanghai are also driving up prices in Germany

The traffic jam of cargo ships due to the ongoing corona lockdown in Shanghai is disrupting global supply chains enormously and will result in higher prices.

“The delivery bottlenecks will now also be felt in Germany,” said Maximilian Butek, the delegate of German business in Shanghai, the German Press Agency. According to estimates, the export volume of the world’s largest port has already fallen by around 40 percent.

Many companies have not received their goods from the country for more than three weeks, said the delegate. Alternative delivery routes via other ports were not sufficient to cushion the loss. “The shortage of supplies from China will continue to have a negative impact on the already high inflation in Germany,” said Butek.

The concerns of the shipping companies are growing

“The maritime supply chains were already tense before the lockdown in Shanghai – now we fear further delays in sea transport,” said the President of the German Shipowners’ Association VDR, Gaby Bornheim. It was “sand in the gears”. Patience is needed now. The liner shipping companies tried everything to transport the cargo quickly.

Rolf Habben Jansen, head of the Hapag-Lloyd shipping company, is cautiously optimistic. “We are now also seeing the first signs that more cargo is being handled in the ports of Shanghai and Ningbo,” he told the television channels RTL and ntv. He therefore personally expects the situation in the Chinese ports to normalize as much as possible in four to six weeks.

Automobile manufacturers or machine builders could be affected

The Kiel Institute for the World Economy (IfW) estimates that the current problems will only have a full impact on Germany in about two months. The goods are about 30 to 40 days on the way to Hamburg, after which they have to be transported further. “Then there could be delays with electronic items such as televisions or tablets or with intermediate goods for German production,” said IfW trade expert Vincent Stamer. This could affect automobile manufacturers or machine builders, for example.

There have been curfews in the metropolis of Shanghai, which has a population of 26 million, for a month. The port city is at the center of the largest corona wave in China since the pandemic began more than two years ago. With lockdowns, mass tests and quarantine, Beijing’s leadership is pursuing a strict zero-Covid strategy, which is being severely tested by the omicron variant BA.2.

Resolving the supply chain disruptions could take months

“The shock waves that the shutdown here in China is triggering are not yet fully comprehensible,” said delegate Butek in Shanghai. It may take months to fix the disruptions in the supply chains. The port in Shanghai is not the biggest problem in itself. The difficulty lies rather in the transport of goods by truck because of the strict corona measures.

“In principle, this applies to all product groups,” said the delegate. “But the concern is great, especially with electronic items and raw materials or preliminary products.” The lockdown now affects all companies – regardless of industry or size. There are massive impairments in the supply chains, the transport and logistics options or in the staff and in production.

“Nobody wants to be a truck driver anymore”

Overzealous local authorities make life difficult for the mostly self-employed truck drivers. They have to apply for special transit permits, undergo constant testing and be subject to the quarantine requirements of individual cities. Nationwide, freight traffic has already fallen drastically. But many especially avoid the Shanghai port.

“No one wants to be a truck driver anymore,” said Jörg Wuttke, head of the EU Chamber of Commerce in China. “Life is too hard.” According to estimates, the availability of trucks in Shanghai has fallen by 40 percent. Ascending trend. Containers are not picked up and will stack. Warehouses are closed. Refrigerated or dangerous goods cannot be removed. “It makes a complicated situation even more difficult.”

During talks with the Ministry of Commerce, the EU Chamber proposed standardizing the requirements for truck drivers in the six provinces in the Yangtze River Delta. Roadblocks at motorway exits would have to be removed and truck drivers provided with food and rest areas. Traffic must be able to flow freely.

However, the crisis is far from over, as Omicron is spreading in China and the strict countermeasures are taking a stranglehold on the second largest economy. “The question now is whether China will move away from the zero-Covid strategy or whether other major cities will be locked down,” said IfW expert Stamer. But the longer the curfews last, the greater the impact – not only on China’s economy, but also on global supply chains and international trade.

dpa