Lockdown blocks cargo transport in China and prevents ships from loading or unloading at the world's busiest port

Due to the Lockdown, generated by the worsening of the epidemic in China, the port of Shanghai, the largest in the world, prevents ships from loading or unloading, increasing global inflation.

O lockdown tax in Shanghai, a very important city in China, has been delaying the loading and unloading of ships from the port of Shanghai, the biggest port in the world, causing a rise in inflation worldwide. The port accounted for 17% of China's container traffic and 27% of its exports. In 2021 alone, it handled 34 million TEUS out of the 200 million containers moved across the country. the city is in lockdown for about 4 weeks and this is due to the covid-zero policy, determined by the government, impacting the largest port in the world indirectly.

Understand why inflation rises with the shutdown at the port of Shanghai

The chaos in the transport of goods is one of the main factors responsible for the high prices in several countries, considering that the offer of products decreases but the demand does not end.

According to NUI Shanghai professor of finance and economics, Rodrigo Zeidan, despite the fact that the port did not close with the lockdown, the restrictions applied by the China they stop 90% of the trucks that take loads to the site. Therefore, limited logistics prevent goods from being shipped abroad.

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As a result, many ships end up stuck in the port of Shanghai waiting their turn to load goods or deliver to Chinese buyers. The result is that ship companies are leaving the world's largest port and heading to their next stop, most often in China itself. The port is operating at half its capacity and the consequences of this can be seen in the satellite images that accompany the ships.

What are the impacts of the lockdown on the port of Shanghai?

A delayed effect bomb is being set in the container market with forecast to explode in June or July in the various markets of the world. Much of the ship's cargo does not leave the world's largest port and the other does not arrive in Mainland China.

If this effect continues and the authorities do not release ships to return to activities, the global cargo market will freeze and will not be like during the pandemic when the wheel of the economy stopped and millions of cargo vaults were scattered.

At the end of last year, this wheel turned again and the price of leasing containers dropped drastically. But how lockdown, rose again and as there is no good news of the epidemic in the municipalities, the fear has already spread to the giants of the ship market.

UBS lowers China's GDP forecast 

Alerts are emerging for the seriousness of the situation and for the fact that possible consequences have not yet been incorporated into the calculations of growth in the world GDP by a large part of economists, who still see the increase as temporary, generating a big scare ahead. However, some have already advanced on the subject and it is known that the first economy to be affected is China itself.

UBS, a Swiss bank, lowered its estimate for a rise in China's Gross Domestic Product for the year from 5% to 4,2%. Effect that distancing measures, such as lockdown, should have on economic growth.

The reasons for fear of a lockdown in China in the transport sector is also linked with the upcoming presidential elections. China will choose a new president in 2022 and it seems clear that the leader Xi Jinping will be re-elected for his third term.