Retailers and shipping chiefs are scrambling to avoid a Christmas goods crisis after a Covid outbreak at the world’s third-biggest cargo port intensified pressure on crumbling global supply chains.
Bosses are racing to avoid higher prices and empty shelves after the closure of a terminal at Ningbo-Zhoushan port in China, which handled cargo equivalent to almost 29m containers in 2020.
The shutdown has cut capacity at the site by a quarter at the busiest time of year, as companies across the West prepare to stock up for Christmas.
It threatens to further squeeze global trade networks which are already being damaged by disruption at ports and major waterways, sending prices paid for containers soaring to record highs.
Charlotte Cook, head of trade at VesselsValue, a research firm, warned the situation suggests there will potentially be disruption for goods heading into the end-of-year period.
“Congestion in Chinese ports is likely to remain for a while with strict lockdowns being enforced, meaning there’s the potential for this to impact Christmas deliveries if we don’t see a significant improvement soon," she said.
“Just as everyone thought container rates couldn’t climb anymore, it’s now looking likely that congestion at key ports could continue to push up rates even further.”
The part-closure of Ningbo-Zhoushan, which is located across the Hangzhou Bay from Shanghai, comes after outbreaks at the Yantian port in Shenzhen severely disrupted operations for several weeks from the end of July.
Analysts at Panjiva, a trade services company, said the timing of the closure is “more significant than the Yantian event” as peak shipping season is now underway. It is likely to stir memories of severe stock shortfalls at the end of 2020 when suppleirs were unable to ramp up fast enough to match booming demand.
Covid has left the shipping industry grappling with staff shortages, slower working practices and backlogs of cargo, meaning about 10pc of the global container fleet is held up in port backlogs. According to data from VesselsValue, there are 352 large container ships at anchor waiting to get into ports around the world .
Nick Glynne, chief executive of online retailer Buy It Direct – which buys white goods, electronics and furniture from China to sell to UK consumers – warned the disruption will only exacerbate existing problems British retailers are facing.
He said: “This is not a good sign for a happy Christmas or even Black Friday.”
In the UK, supply chain headaches are being made worse by a shortage of lorry drivers.
Currys and John Lewis are among a string of businesses offering sign-on bonuses worth £1,000 or more to get hauliers on board.
On Thursday, convenience store McColl’s warned its full-year performance would fall short of expectations unless there is a significant improvement in disruptions caused by driver shortages.
Andrew Opie, a director at the British Retail Consortium, said retailers are working closely with suppliers to resolve issues.
He said: “Christmas is hugely important to retailers and customers alike, and businesses are already making preparations.
“While we do not anticipate problems, retailers will be taking all necessary measures to mitigate possible disruption.”
Almost half of Britain’s businesses are also suffering from a shortage of staff which threatens to undermine the economic recovery, forcing companies to hike wages even as they struggle to grow fast enough to meet customer demand.
This is blighting swathes of the economy, according to the Institute of Directors (IoD), with almost one-third of businesses struggling to find professionals such as lawyers and accountants, and more than one-quarter saying skilled trades and technicians, ranging from electricians and mechanics to nurses and engineers are in short supply.
Booming demand has contributed to a crisis also driven by a lack of workers with the right skills, as bosses blame a long-term failure to train staff, as well as a lack of migrants due to Brexit and Covid, the “pingdemic” keeping workers at home, and the final months of the furlough scheme which has left some reluctant to return to work.
One-third of hospitality businesses said they have had to increase pay by more than 5pc, with almost as many construction companies and manufacturers raising wages by the same amount.
Joe Fitzsimons, of the IoD, said: “The long-term skills gap combined with both a reduced talent pool since leaving the EU, and the immediate impact of the ‘pingdemic’, are the primary pressure points.
“The resultant rising wage bill is the next bitter pill to swallow. It is understandable that directors are very concerned.”