China’s zero-Covid policy is so strict that it shut down a whole shipping terminal after just one case

China has shut down a key terminal at its Ningbo-Zhoushan port, the third busiest port in the world, after one worker was found to be infected by Covid — a move that will likely put further pressure on already stretched supply networks. It was the second time this year that the country suspended operations at one of its key ports.

Analysts say China’s “zero tolerance” approach toward Covid will exacerbate already stressed supply chains this year. Some warn that this may not be the last closure at a port as long as Beijing continues to take this stance. Dawn Tiura, CEO of Sourcing Industry Group — an association for the sourcing and procurement industry, said China’s stance will lead to “severe” supply chain consequences.

All inbound and outbound services at the Meishan terminal at the Zhoushan port were suspended on Wednesday until further notice, according to Chinese state media. The terminal is key to servicing shipments to Europe and North America.

Supply chains have already been majorly disrupted this year by crises such as the shortage of shipping containers, and the Suez Canal incident. In June, Covid infections triggered disruptions at shipping hubs in Southern China, including the key Shenzhen and Guangzhou ports — the first time that China suspended operations at ports due to Covid cases. China’s zero tolerance for Covid approach suggests that this latest port disruption may not be the last, said Nick Marro, lead of global trade at the Economist Intelligence Unit.

China has been experiencing a resurgence of Covid cases due to the highly transmissible delta variant. Daily cases crossed the 140 mark on Monday — the highest number of daily infections since January, according to Reuters. Chinese authorities have ordered mass testing in a few areas and imposed widespread movement restrictions in major cities including Beijing. The suspension of services at the Meishan terminal comes as container shipping rates continue to soar this year. Container shipping rates from China and East Asia to the west coast of North America have surged over 270% this year to over $15,800 per TEU, according to the Freightos Baltic global container freight index. Meanwhile, rates to the east coast have soared over 220% to hit over $17,500 per TEU, according to the index.

China’s zero-Covid policy is so strict that it shut down a whole shipping terminal after just one case, CNBC, Aug 13