New lockdown in the northern Chinese port of Qinhuangdao will harm supply chains again - Xclusiv Shipbrokers

As the western economies are moving to a post COVID era, in China the COVID wave and its repercussions continue to spread, with the northern port of Qinhuangdao being the latest Chinese commodity hub to be shut down due to the virus as Chinese authorities persist on zero covid policy, according to the Xclusiv Shipbrokers’ report.

About 50 million tons of goods were handled in Qinhuangdao in the first quarter of 2022, mainly coal from Inland and metal ore imports, so this new lockdown will sustain complications to the supply chain as well as the shipping industry, stated in the commentary.

In addition as analytics point out inflation continues to increase newbuilding prices which are directly correlated to rising energy and steel prices. This price hike in the newbuilding sector which may lead to reduced ordering of new vessels in the near future. Its noteworthy that in terms of newbuilding crude tanker prices, a VLCC is estimated at USD $116m, a Suezmax at USD 78m while an Aframax around USD $60m. Comparing these prices with levels from January 2021, there is an increase of 26%, 23% & 18% respectively.

Shipyards have to cope not only with inflation and higher costs but also with labour shortage. According to market sources, as the shipbuilding market started collapsing in 2013, many workers moved to other kind of industries or retired decreasing the supply of shipbuilding labour. As the orderbook significantly increased in the post COVID-19 era, many yards cannot secure required workman force. In South Korea, yards estimate that they will face a shortage of 9,500 workers by September this year, according to the Xclusiv Shipbrokers’ report.