South China Shipping Crisis 🚢

South China Shipping Crisis

Remember the Suez Canal fiasco? A shipping container larger than the Empire State Building got stuck in one of the world’s most used shipping lanes, holding up $9 billion in global trade each day. As if one shipping crisis wasn’t enough, businesses and consumers are preparing for yet another shipping crisis.

A sudden increase in Covid-19 infections in the Chinese coastal province of Guangdong has forced authorities to shut down districts and businesses. The shutdowns are creating massive shipment delays in key Chinese ports and driving up already-high shipping rates.

Guangdong represents nearly a quarter of all Chinese exports. It also houses the Shenzhen and Guangzhou ports, which are the third and fifth largest ports in the world. Disruptions to the two ports would have a massive impact on supply chains, which are already struggling.

If supply chains are hit, export prices and shipping costs will likely increase. Additionally, consumers could see shortages of their favorite Asian-made products. It cannot be understated how essential the province of Guangdong is to the global supply chain.

The new shipping crisis has investors on the edge of their seats as they wait to see what happens to the economy in the coming months. They are already expecting higher prices due to inflation, and now they are worried about even higher prices due to the shipping crisis in China.

Although there is no definitive timeline for how long the disruptions in Guangdong will last, some experts have said they could last months or even an entire year.

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

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