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Shanghai Lockdown shutters three state-owned shipyards

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SHANGHAI : As Shanghai goes into COVID lockdown, most of the shipping industry’s attention has focused on disruption in manufacturing, warehousing and drayage operations near the world’s busiest container seaport. While these impacts will likely be felt in deep-sea shipping for months to come, the lockdown measures have taken another casualty: some of China’s biggest shipyards have been forced to temporarily shut down, and at least three have reportedly declared force majeure.

An American merchant mariner who was aboard a ship in drydock in Shanghai told NBC News that the shutdown happened rapidly. “About 10 days ago we had probably about 100 shipyard workers working with us and then they got the call around lunch time and everyone just left,” said mariner Giancarlo Thomae, speaking to an NBC affiliate in California. “There were acetylene torches just laying all over the place, unopened water bottles.”

According to multiple reports, the lockdowns have shuttered Shanghai Waigaoqiao Shipbuilding, Jiangnan Shipyard and Hudong-Zhonghua Shipbuilding since mid-March. All three are owned by China State Shipbuilding Corporation (CSSC), the world’s largest shipyard conglomerate. They are among the most sophisticated yards in China: Hudong-Zhonghua is a leading Chinese builder of LNG carriers and Megamax-24 boxships, and Shanghai Waigaoqiao is building China’s first domestically-made full size crew ship. Shanghai Waigaoqiao is also China’s most prolific yard by deadweight tonnage.

In addition to merchant ships for Western shipping companies, Jiangnan and Hudong-Zhonghua also build destroyers, carriers and amphibious assault vessels for the PLA Navy – sometimes in the same drydocks at the same time. Many of these newbuilds are deployed to reinforce China’s extralegal maritime claims in the South China Sea.

CSSC has been investing heavily in expanding its naval shipbuilding capacity at Jiangnan and Hudong-Zhonghua. The built-up land area for production at Jiangnan has grown by more than 60 percent since 2011, according to U.S. defense think tank CSIS, with almost all of the expansion concentrated in military shipbuilding areas of the yard.

Hudong-Zhonghua is in the process of relocating its entire operation to a new site on Changxing Island, away from central Shanghai’s residential districts. The second phase of the new yard began development in 2021, and workers are now building a new dock basin – a large drydock for multiple ships – at the 530-acre site. The project is on a tight timetable for completion in 2023, and CSSC has not yet indicated whether COVID-related delays might push back the opening.

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