Typoroon season threatens to delay global supply chains

Typoroon season threatens to delay global supply chains

- Extreme weather in China is becoming the latest challenge to the global supply chains, as a heavy typhoon season threatens to further delay goods stuck at some of the world's busiest containers ports.

Yantian port in southern Shenzhen's export and industrial hub of Shanghai temporarily stopped drop-off services of containers on Tuesday night due to a typhoon alert. Just two weeks earlier, Shanghai's Yangshan mega-terminal facility and nearby ports evacuated ships as Typhoon In-Fa slammed onto the coast, bringing widespread flooding and toppling containers that were stowed in the hold of a bulk carrier going to China.

Heavy rain, high winds and flooding this year are tying up the global trade as the already overstretched shipping industry struggles to recover from disruptions ranging from Covid - 19 outbreaks to geopolitic unrest. China is likely to get worse, as more typhoons are predicted to hit China in the coming months.

From August to December, 16 to 18 typhoons are forecast to form in the Northwest Pacific and South China SeaChina Sea, the Meteorological Administration said Wednesday. Four to six of these are expected to make landfall in China or affect the country.

'Each time a port is forced to close, containers continue to pile up, adding to existing delays, said Alex Hersham, CEO of the digital freight forwarder Zencargo. 'And as this season is expected to be heavier than usual for tropical cyclones, we can expect more delays like this.

Supply chains have faced a string of bad luck this year. A Covid-19 outbreak among port staff was to blame for a partial closure of Yantian in May, leading to container goods piling up for a month. As ships diverted to Guangdong, some factories in the nearby manufacturing hub of southern China shut down because of surplus inventory that couldn't be exported, according to analysts and logistics intelligence firm project 44.

The impact of Yantian's closure was unprecedented on the supply chain because it serves one of the world's largest manufacturing bases, said Salmon Aidan Lee, head of polyesters at consultant Wood Mackenzie Ltd. 'If we have a few more Typhoons that come our way and knock down production a few days each time, this problem will get worse.

While the average waiting time for a container to be resumed at Yantian has dropped from 25 in June to five days and operations resumed on Wednesday evening in the port, the situation could easily worsen again if weather-related delays at other Chinese ports build up, said Hersham.

Typhoon In-Fa also impacted factory operations in eastern China, while major ports along the Yangtze River, the country's busiest inland waterway, halted operations last week, Shanghai Shipping Exchange said in a July 30 note. Torrential rains and flooding have affected flows of commodities like oil and coal, the company said.

The disruptions are driving the cost of shipping a 40 - foot box from China to the U.S. to record levels higher $10,000, according to maritime consultant Drewry. Ultimately, the snarls will add inflation, said Lee who predicts U.S. consumers will have to pay about 20% more for Christmas presents - from toys to furniture.