Wednesday, May 04, 2022 by Ethan Huff
The situation in communist China with the government’s new Wuhan coronavirus (Covid-19) lockdowns in Shanghai and Guangzhou – and now Beijing – is slated to decimate America’s trucking industry this summer.
United States truckload volumes were already down in February and March for reasons not specifically related to China, and now they are expected to plummet even further as a result of China’s port shutdowns.
FreightWaves estimates that container imports from China represent about 16 percent of U.S. truckload volumes and an even larger percentage of U.S. dry van truckloads. Nearly half of all containers that come into America originate in China.
“The recent slowdown in U.S. truckload markets is likely a precursor to a steeper decline in the coming weeks,” reported Zero Hedge.
On Twitter, geopolitical analyst Peter Zeihan wrote that “[f]or all intents and purposes, Guangzhou and Shanghai are no longer participating in international manufacturing.”
It was initially believed that Beijing would be spared from the same oppressive lockdowns, but reports started to emerge around April 24 of Chinese state police implementing similar restrictive measures.
In other words, the three largest cities in China are basically being removed from the world market. At least 40 percent of China’s gross domestic product (GDP) was already offline when Beijing was still open, which means that now it is about to get a whole lot higher.
“The vast majority of this GDP is directly related to global manufacturing,” Zero Hedge notes. “Removing it means removing the flow of containers from the world economy.”
Starting on April 6, container volumes from China to the U.S. began to decline in roller coaster-like fashion. There have been several ups and downs ever since, but the peaks are decreasing.
In the first 10 days, container volumes dropped by 31 percent. They then rebounded about halfway to a roughly 16 percent drop. They are now expected to plummet back down even further.
FreightWaves SONAR’s volume booking forecast foresees container volume falling to 50 percent of the April 6 figure.
“This would be nearly the same level of a drop that China to U.S. exports saw during the Chinese New Year in 2022 and lower than any other point since July 2020,” Zero Hedge reported.
Some Chinese ports are still operating, but a greater concern is Chinese trucking operations. Only about 20 percent of Shanghai’s trucking capacity is currently operating, and trucking is a big part of how containers get in and out of Chinese ports.
Upwards of 75 percent of container volumes in Chinese ports enter or exit on a truck. In the United States, both trucks and railroads move freight in and out of ports.
“The loss of trucking capacity in China means that raw materials and components can’t get from the ports to factories and finished goods can’t leave the factories to the ports to be put on ships for export,” Zero Hedge added.
“The temporary blip (dead cat bounce) was likely containers that were already in the queue at the port prior to the lockdowns.”
Once the factories run out of new components and raw materials, they, too, will need to halt operations. This cascading failure will decimate what remains of the already damaged supply chains.
“According to SONAR’s ocean intelligence dashboard, it currently takes 27 days for a vessel to travel from a Chinese port to a U.S. port,” Zero Hedge revealed. “Since the volume of containers from China to the U.S. started its drop on April 6, it will likely be May 3 before U.S. ports experience a drop in volume.”
To keep up with the latest news about the controlled demolition of the global economy, be sure to visit Collapse.news.
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