Global shipping remains “precarious” because of the impact of Covid-19, with a continuing risk of supply chain problems from China, according to risk management specialist Russell Group.
It has published new analysis showing that port congestion at Shanghai Port – the largest port in China and arguably the world – is costing an estimated $4.5 billion (£3.3 billion) a week in lost trade. It is China’s main port for shipping apparel to Europe and the US.
Vessels are over a week behind schedule due to large pent-up demand driven by lockdowns in other major Chinese ports including Ningbo and Tianjin. This has been caused by a surge in Covid-19 cases in those cities.
Shanghai is also experiencing a rise in Covid-19 cases but so far the authorities have largely contained the issue to a restricted area rather than enforcing a lockdown there.
Russell Group managing firector Suki Basi said: “Talking to our extensive client list of leading (re)insurers, there is a clear worry surrounding the rise in both supply chain and business interruption risks.
“This constant dialogue with our clients has led us to enhance and develop our data analytics and modelling scenarios to help them understand their supply chain risks.”
The analysis was based on a week’s worth of trade in and out of Shanghai from 12 to 19 January 2022. Russell Group also drew on data from its ALPS platform which provides risk and exposure modelling.
Basi added: “Furthermore, our new analysis from the ALPS Scenario Factory shows the precariousness of global trade.
“In this climate, a lockdown in a major port can have a knock-on effect on another port, in this case Shanghai, which is unable to cope with demand, resulting in delays that disrupt organisations and consumers alike.
“As always, we want to reiterate the importance of combining good real-time data insights with strong analysis of this data to ensure that corporates and their insurers can navigate through these perilous times without suffering a Shanghai Surprise.”
