Freight rates will remain elevated as China’s dogged pursuit of a zero-COVID strategy continues to hold up international trade, the chiefs of two global logistics companies said. One warned that the situation could pose an existential threat to manufacturers that produce goods with little room in the pricing to absorb higher transportation costs, reports Nikkei Asia.
The Chinese strategy has caused a shortage of labor at ports, preventing ships from quickly offloading cargo and sailing elsewhere. Labor issues have also clogged US ports, where maritime companies and longshore unions are negotiating employment terms. Export bans and frequently changing regulations are also keeping international trade from normalizing, the executives said.
“Even today, 10% of all container ships globally is actually delayed — waiting at anchor, or waiting for port labor,” Jeremy Nixon, CEO of Singapore’s Ocean Network Express, told Nikkei Asia. “We still have this capacity restriction at the moment, so still, supply and demand is tight.”