After one worker tested positive for COVID-19, China immediately shut down one of its key terminals. The country's "zero tolerance" approach has caused some concern over added supply chain disruptions.
Earlier in the week, Chinese authorities shut down the country's Ningbo-Zhoushan port -- the world's third busiest port. Officials said Thursday that all inbound and outbound services will be temporarily suspended until further notice. The port is a key servicing terminal for vessels carrying shipments to Europe and North America.
Analysts said China's strict approach to controlling the spread of the virus might exacerbate already stressed supply chains. The shutdown was the second time officials had suspended operations of a key port due to a detected COVID-19 infection.
Sourcing Industry Group CEO Dawn Tiura said China's zero-tolerance approach would likely result in "severe" supply chain consequences. She said the country is now so strict about its containment protocols that a single infection can result in the shutdown of a major facility, or in this case, a major shipping terminal.
The Ningbo-Zhoushan terminal typically handles millions of twenty-foot equivalent units (TEUs) per year. In 2019, the port handled about 27.49 million TEUs of container throughput. Last year, the figure had increased by 5% to 28.72 million TEUs, according to the World Shipping Council.
Since the start of the pandemic, global supply chains have been majorly disrupted, causing a shortage of shipping containers. The Suez Canal incident not only exacerbated the problem but also exposed the worsening supply chain issue.
In June, China shut down key Shenzhen and Guangzhou ports due to a surge in COVID-19 infections in the region. The lead of global trade at the Economist Intelligence Unit, Nick Marro, said the latest shutdown would unlikely not be the last.
"China's 'zero Covid' approach means that officials will prioritize pandemic mitigation over everything else, especially given the highly contagious nature of the Delta strain," Marro said.
Marro said any further disruptions would negatively affect the economic performance of many companies over the third quarter. He said as long as China retains its strict containment policies, risks of sudden disruptions would persist.
China has recently been experiencing a resurgence of COVID-19 cases, fueled mainly by the spread of the more contagious Delta variant of the coronavirus. On Monday, the country recorded its highest number of daily infections since January.
