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How omicron may affect China’s ports, a key to the global supply chain

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If the omicron variant were to cause port shutdowns, they would likely coincide with Lunar New Year closures. Above, workers at a container port in Wuhan, China. Getty Images

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This week, President Joe Biden offered an optimistic view of the supply chain’s current struggles, pointing to everything his administration has done to ease congestion at domestic ports.

But there’s a lot that Biden can’t control about the global supply chain — and how other countries respond to the coronavirus omicron variant. 

Take China, for example, which reacted to delta and other variants with strict monitoring, testing and quarantine protocols at ports. Now there’s omicron. 

China has had a zero-tolerance COVID-19 policy thus far, according to Nargiza Salidjanova with Rhodium Group. “And the government has shown no indication that it’ll be relaxed anytime soon,” she said.

China’s protocols led to port staffing shortages, slowdowns in ships being loaded and unloaded and other supply chain congestion.

The omicron variant could lead to more slowdowns out of Chinese ports, Salidjanova added. And the timing here won’t help, given that it’s now the holiday season in many parts of the world. That’s followed in early 2022 by the Lunar New Year. 

“And so we can have a confluence of factors where COVID-related shutdowns — if they occur — are also going to overlap with holiday-related shutdowns, which could contribute to kind of a more exaggerated challenge,” Salidjanova said.

The challenge is already being felt at China’s smaller ports.

Starting on Dec. 15, some services at these so-called feeder ports in China will be suspended until early February. Those feeder ports, where little vessels transport goods to bigger international ports, are essential, said Steve Kranig, director of logistics at IM-EX Global.

“Think of a system like a little shuttle bus going around to all these hotels and picking up people, and then they take them to, like, a bus terminal where they all get on a very, very large bus, and then they go somewhere,” he said.

This is happening with shipping just as things were starting to look up.

“Things were definitely improving in Chinese ports,” said Per Hong, a partner at Kearney. There could be more omicron-related slowdowns coming, “but it’s early days.”

Hong doesn’t want to raise an alarm, but he is watching how China and its ports react to the new variant.

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