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Where Is Ningbo, And Why Does It Matter To Holiday Shopping This Fall?

By News Creatives Authors , in Business , at August 14, 2021

The Covid-19 triggered closure of the Ningbo Meidong Container Terminal is yet another in a series of disruptions to ocean container shipping. Yet many Americans have never heard of Ningbo, nor its position in global trade routes. If the terminal doesn’t reopen soon, we could see a cascading impact on cargo flows amidst the peak season for stocking fall and holiday merchandise.

Ningbo is in the northeastern corner of Zhejiang Province in the People’s Republic of China, and it is in the economic heartland of the Yangtze River delta. Shanghai to the north, Hangzhou to the West, and Ningbo to the south surround Hangzhou Bay. Most people have heard of Shanghai, and Hangzhou is becoming better known as the home of companies like Alibaba and Geely, but Ningbo is less well-known.

The Ningbo-Zhoushan Port complex is the fourth largest in the world, and third largest in China. Ningbo-Zhoushan is on the south side of Hangzhou Bay; the competing Shanghai Yangshan terminal is on islands and reclaimed land on the north side of the bay. Shanghai Yangshan is connected to Shanghai’s Pudong New Area via the Donghai Bridge, a 32.5 km (20.2 mile) sea bridge which opened in 2005. Not to be outdone on infrastructure building, the Hangzhou Bay Bridge, which opened in 2008 is 35.7 km (22.2 miles) long. It cuts across the bay and reduces the driving distance between Shanghai and Ningbo by 400 km (249 miles). That could be useful as cargo gets diverted from Ningbo. It is amazing that two of the top four container terminals in the world sit on a single bay facing the East China Sea.

Zhejiang Province is an economic powerhouse. Major industries include textiles, iron and steel, plastics, petrochemicals, chemicals, electrical equipment, machinery, and food products. Zhejiang Geely Holding Group has a new highly automated electric vehicle factory there. A shutdown of exports from the region would be disruptive, but the bigger problem is the cascading impacts on other ports and shipping transit times.

Container shipping lines operate their services on rotations, called “strings,” which are sequences of port calls. For example, CMA-CGM’s Pacific Express 3 (PEX3) string starts in Singapore, calls on Vung Tau, Vietnam, Hong Kong, Shekou, Ningbo, Shanghai, Busan, Korea, and then heads to Houston, Texas via the Panama Canal. It continues on to Mobile, New Orleans, and Miami and then makes it back to Singapore 83 days after it first left. Hold it up for a few days somewhere, and everything gets delayed along the way. According to vesselfinder.com, the CMA-CGM Samson on the PE3 string arrived Meidong on August 9 and is presumably stuck. Those athletic shoes made in Vietnam destined to reach Houston in mid-October? Could be a little dicey. 

The problem with service strings is that they suffer from a compounding delay problem. A couple of years ago some colleagues and I wrote a case on United Airlines and its passenger flight scheduling. The opening setting was a couple who flew from Los Angeles to Houston, but missed their connection to a flight to Cancun for their 50th wedding anniversary cruise with their family. Their flight was delayed because the incoming aircraft for their flight was late arriving from Chicago, because before that it had suffered a long weather delay leaving Newark. Many of us have suffered through similar situations.

Container shipping lines use service strings to enable the more efficient use of their cargo capacity and to provide more frequent service. But when a stop like Ningbo goes awry, it causes a cascading set of delays. Some lines are responding to the closure by skipping the call, as Maersk has already announced for six vessels. That helps them to keep the rest of the string closer to schedule. Besides, shipping containers tend not to call the press or tweet their complaints like aggrieved airline passengers sometimes do.

Every disruption to service strings, like Ningbo today or the Yantian closure and the Ever Given Suez Canal incident before it, puts additional stress on an ocean transport system that the world depends on, one that has been running at the redline for the past year. If China keeps shutting a port every time a Covid-19 outbreak occurs continues, we’re going to have a holiday shopping season plagued by late merchandise and shortages. But then that was probably already in the cards.

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