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Weeks Of Disruptions Looming For Australian Retailers

Weeks of disruption are looming for Australian retailers as Chinese officials move to close more ports due to new COVID outbreaks, we have also been told that the cost of a 40-foot container has blown out to $19,000 which according to some suppliers could see costs of goods rise by up to 20% running into the last quarter.

Originally Yantian terminal in Shenzhen was closed after port workers tested positive for Covid-19 now outbreaks have been discovered at two other ports according to news coming out of China.

Several brands have told ChannelNews that they have taken to air freight to overcome supply problems as several airlines move to strip seats out of passenger aircraft to retro fit them as freighters carrying goods into Australia.

Korean Air said recently it had operated 10,000 cargo-only passenger flights since March last year, and still flies 800 ‘preighters’ every month.

Its initalservice was between Incheon and Ho Chi Minh City, in Vietnam where brands such as Samsung are expanding their manufacturing operations, they have now expanded their freight operations to 65 routes to North America, Europe, and Australia with 400,000 tonnes lifted so far.

Korean Air said it had increased cargo capacity by utilising overhead bin space, using cargo ‘seat bags’ for loading onto passenger seats, as well as on some aircraft, removing seats altogether.

According to ACER CEO Darren Simmons the cost of a 40-foot container to Australia is now being quoted at $19,000.

Delays at Chinese ports have put a huge strain on the already-stretched global shipping industry, worsening supply chain delays for manufacturers and retailers around the world he told ChannelNewsYantian handles 13m 20-foot shipping containers a year, making it the third-largest terminal in the world. But congestion at the facility, operated by Hong Kong-headquartered Hutchison Ports, has spilled over to other nearby terminals such as Nansha and Shekou.

Local authorities in the region blocked roads and closed off some business zones in a bid to stop the spread of the virus.

The situation has exposed the vulnerability of global shipping to future delays if even relatively minor outbreaks occur in Chinese port cities. Lars Jensen, chief executive of consultancy Vespucci Maritime, said.

ChannelNews has also been told that several shipping Companies are refusing orders for shipping to New Zealand.

Lars Jensen said “The Chinese authorities are attempting to crack down hard on the smallest outbreaks. . . It only takes a few single cases to shut down large areas. We could see much larger impacts,” he said.

Ocean shipping has been under immense stress since late last year as pandemic-related controls, such as border restrictions, caused a shortage of empty containers. The situation was worsened by the Suez Canal blockage in March, which resulted in further delays.

Shipping companies are also struggling to keep up with rising demand for their services after the pandemic fuelled a boom in online shopping, and as advanced economies recover from last year’s historic recession.

As a consequence, the cost of sending a 40-ft container on the Asia to Australia routes have blown out.

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