China and The Reality of Shipping Delays

by | Jun 14, 2022 | Resources | 0 comments

As we began to emerge from the pandemic, it seemed that shipping delays would be a thing of the past. That is most definitely not the case, however. In light of the toll that COVID-19 is taking on Shanghai and other Chinese cities, shipping delays have become a reality.

Many experts expect we will see shipping issues deep into the summer months. Global supply chains will be adversely affected, and the consumer will inevitably suffer. And even though some cities in China are currently easing COVID-related restrictions, the problems are still emergent.

Why is China Causing Shipping Delays Around the World?

Many might wonder why issues surrounding COVID increases in China are affecting shipping worldwide. China represents the world’s biggest container port. It is thus having a ripple effect and impacting ports around the globe.

And it’s not just about shipping via the seaways. Truck drivers are also finding it increasingly difficult to reach destinations throughout China. Covid has saddled the country with widespread travel restrictions, making shipping delays even more pronounced.

Shanghai is China’s most populous city. Since the later part of March, Shanghai has been under a strict lockdown. But COVID rules and restrictions have also extended to other major Chinese cities, including the capital Beijing.

Lines at Shipping Ports

According to one report, almost 20% of container vessels are now waiting at otherwise jammed ports. China’s lockdown is in effect giving rise to one massive bottleneck. This, however, has not deterred the country from its approach to handling COVID. According to the president of China, they will continue with their zero-tolerance policy. Meanwhile, the containers are accruing; this is also in part because of issues with trucking and consequent truck shortages.

Manufacturing in China

It’s not just about shipping delays with China as the problematic epicenter. In battling the latest COVID outbreak, China has also suffered significant losses in its manufacturing sector. Reports from factories suggest that their activity has been at its lowest since the start of the pandemic. There’s been a significant decrease in export activity. China’s overall trade with the rest of the world is thus suffering badly.

According to many financial experts, the problems in China are likely to impact inflation around the globe. Supply shortages fuel inflation, as do issues with shipping bottlenecks. Therefore, this port congestion we see daily in China could add fuel to the proverbial fire and cause consumer prices to rise even faster than first anticipated.

Sadly, there is not a great deal that can be done except to sit back and wait to see how this latest Covid surge plays out in cities such as Shanghai and Beijing. Will shipping delays related to Chinese ports significantly impact consumer prices worldwide? Many predict that, yes, this will be the case. And people should consequently prepare for inflation to stay at current rates or go even higher.

What Can Your Small Business Do…

  • Be transparent. Keep the lines of communication open. Being honest with your customers and telling them what is going on is generally your best policy. People are frustrated when their shipments are delayed. They get even more frustrated if there’s no communication from the business.
  • Take ownership. You may have to deal with some angry customers. There might not be any way around it. But the faster you act and the more proactive you are, the better your chance of maintaining that client relationship.
  • Offer special promos and deals. If you are running into repeated problems with shipping delays, you might offer customers discounts or sales on other products that you know are available. This might help make them feel special and thus ease the frustration of a delayed shipment.
  • Under promise and overdeliver. Especially with shipping delays pretty much expected across the globe, you don’t want to overpromise. Think twice about offering same-day or two-day delivery. If you can get their item to them faster, great. If not, be sure to give yourself a cushion.

First Union Lending is Here to Help

We want to see businesses thrive and grow in this challenging financial period. We offer various fast and flexible funding solutions that fit your business such as short-term loans, lines of credit, and SBA loans, among other products. Even if your credit score is not where it should be, we might still have a financing option for you. Call today, and let’s get started.