SIMIC

Feeder and barge services were suspended earlier this month to allow staff time to quarantine before travelling home for China's most important holiday that begins February 12.

Swamped with sustained and heavy demand from European and US shippers, the suspension of feeder services linking the hubs of Hong Kong and Shenzhen to China's inland manufacturing centres is further disrupting the regional supply chain.

Chairman of the Hong Kong Liner Shipping Association, Roberto Giannetta, described the suspension of services as "disconcerting", adding that his group has asked the governments of Hong Kong and Guangdong Province to consider revising the Covid-19 restrictions for crew in the same way airlines provide crew rotations, reports IHS Media.

"We alerted them that, in the absence of these feeder services, it would be difficult for all lines to meet current demands for import and export from both Hong Kong and/or Shenzhen, and this is what has now happened," he said.

"A number of lines have already suspended acceptance of cargo bookings in this period," Mr Giannetta added. "This means that either the shipping lines are rejecting such cargo requests, or alternate arrangements incurring additional costs are being introduced to handle the cargo demand."

Ocean Network Express (ONE) became the latest carrier to suspend bookings for cargo bound for ports in South China and Fujian until mid-February, joining Hapag-Lloyd, CMA CGM, and OOCL that in December announced a hold on import bookings.

Asia-Europe supply chains are creaking under the weight of strong demand from European importers that have overwhelmed available vessel capacity and created a severe equipment imbalance. Shippers are already facing huge increases in rates, with average spot rates on Asia-Europe at record levels.

Facing such high prices, some European shippers are delaying the export of whatever cargo they can until after Chinese New Year in the hopes that rates will decline after the holidays.

But that might be wishful thinking, said Marco Reichel, business development director for Asia Pacific at Crane Worldwide Logistics. He said warehouses in South China were filling up as shippers held on to their cargo, but how rates would develop through the first quarter remained very uncertain.

"We are not 100 percent sure the rate will relax after Chinese New Year," Mr Reichel said. "The greater expectation is that the rate level will stabilise at this [current] level until at least the second half."