Dive Brief:

• The Port of Yantian began full operations at midnight local time Thursday morning after weeks of reduced capacity due to COVID-19 restrictions, according to an update from the port authority.
• Despite the resumption of full capacity, it could take up to a month to work through the backlog of inbound ships and outbound containers that have built up around the gateway, experts said.
• "It's a good sign, but it's not actually something that we can all rejoice for right now," Akhil Nair, VP of global carrier management and ocean strategy at SEKO Logistics, said of the resumption of full operations during a press call Wednesday. "They still have a lot to go through and a lot of backlog to clear."

Dive Insight:

Yantian, one of the largest ports in the world, limited its operations to less than 30% of its total capacity at times over the last month after a port worker tested positive for the Alpha variant of the coronavirus. This led to increased dwell times, an uptick in blank sailings and a line of ships in the South China Sea waiting for their turn to berth.

Earlier this week, there were 67 vessels waiting in the area around Yantian, according to Flexport. The port's backlog is estimated to be about 160,000 containers or almost 300,000 TEUs, Nair said.

"We are still ... at least several weeks before we can call it anything like business as usual in Yantian," Chief Shipping Analyst at BIMCO Peter Sand said Thursday. "It could be a month or two, I mean closing down a port that normally operates a million TEU on a monthly basis, of course has significant knock-on effects on operations in the port."

The effects extend beyond the boundaries of the port. The issues at Yantian come as global shipping capacity is in high demand. The uptick in blank sailings took capacity out of the market at a time when shippers are hungry for space on ships.

"Having an incident like Yantian right now, in a market which is out of balance, that just adds on top of the current imbalance," Sand said.

The flow of cargo has also been impacted by the shortage of reefer plugs at Yantian, which has resulted in carriers levying reefer surcharges. This shortage further complicates the ability to move cargo, Sand said.

"If that reefer plug is unavailable anywhere ... you cannot just discharge [the] container or the goods will perish if they are not chilled constantly, so they need to remain on board the ships," he said.

Another impact is that all of these ships waiting at anchor also have empty containers on board that manufacturers in China need to move goods out of their facility and return to the port for export, Sand explained.

It is this backlog outside of the port that will take the most time to clear. The port is confident it can clear the containers it already has within a couple of weeks, according to Nair. But he said working through the backlog at nearby factories and warehouses is what will take up to a month.

Carriers have shifted their operations to alternative ports in an attempt to avoid Yantian over the last month. This has resulted in an uptick in congestion at surrounding port locations, but this is expected to ease in the coming days as ships change their rotations back to Yantian, Nair said.

The entire situation "brought more stress into the already stressed-out planning by the global shippers," Sand said.