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Coronavirus: Maersk applies congestion surcharge on reefer cargoes in China

…As South Korean ports secure additional storage sites for containers

Following the extended Chinese New Year holidays and Coronavirus situation, congestion has reached critical levels and shipping liners such as Maersk says its now forced to divert cargo due to shortage of reefer plugs at terminals in Xingang and Shanghai Ports.

To deal with extra cost of diverting cargoes, Maersk will apply congestion surcharge on reefer containers meant for these terminals.

Maersk also recommended to customers, when possible, to ship to other Chinese destinations or other markets in order to avoid the congested ports especially for transit of time-sensitive, perishable, chilled commodities with a limited/short shelf life such as fruit/vegetables and frozen meat.

For cargo already in transit, Maersk said it will offer a free change of destination for those customers who decide to divert the cargo to other Chinese destinations.

Also, Maersk will, until further notice, accept reefer bookings into Shanghai and Xingang strictly on the following conditions, which the customer is deemed to have accepted:

“Maersk does not guarantee the cargo routing nor take any responsibility for the delivery time. Cargo arriving in the ports of Shanghai and Xingang is being diverted to alternative locations until the ports are able to receive reefers again. This situation is outside of our control and is also affecting cargo already in transit to mentioned destination ports,” the company said.

It further stated: “Maersk will apply effective from 7 February 2020 a congestion surcharge of US$1,000 per container for all reefer cargo arriving into Shanghai and Xingang to cover for the additional cost of re-routing. We are monitoring the situation and depending on developments we will determine if further measures need to be taken.”

In a related development, the Ministry of Oceans and Fisheries (MOF) of South Korea said on 7 February 2020 that alternative container storage sites have been secured, alleviating the increasing burden on the country’s ports, amid the novel coronavirus outbreak.

This was because anxious governments have taken drastic action by quarantining ships arriving from China while the usual post-Lunar New Year lull has also seen liner operators reducing their sailings. This has resulted in shipments to and from China being delayed.

Currently, Busan, Incheon and Yeosu-Gwangyang, the three busiest container ports in South Korea, have perfected plans to use unused berths and empty container yards in their hinterlands, as makeshift storage sites. These sites will be used if the storage utilisation at the ports exceeds 90 percent.

The makeshift sites are berth three in Gamman Port and one in Sinseondae Port in Busan North Port, Ungdong hinterland in Busan North Port, Incheon South Port’s Aam Logistics two Complexes, the hinterland of Incheon’s coal discharge terminal, an empty yard in Incheon New Port, three land plots in Gwangyang Port and berth 4 in Gwangyang’s container port.

The ministry however said that it is working with shipping companies, liner operators and port authorities to review various support measures that can minimise the impact on shipping companies. In addition, the storage at the ports is continuously monitored to prevent any disruption to port operations.

For instance, as of 5 February 2020, the storage facilities in Busan were 76 percent utilised, down from 82 percent on 31 January. Incheon’s storage facilities were 81 percent utilised, slightly down from 83 percent on 31 January. Storage facilities in Yeosu-Gwangyang, 67 percent full, down from 71 percent on 31 January.

However, the MOF and port authorities remain concerned as the utilisation rate is still higher than the respective average utilisation of 70 percent, 75 percent and 69 percent in 2019, necessitating contingency plans.

Industry consultancy Alphaliner has estimated that the epidemic could wipe 6 million TEU off China’s container throughput in the first quarter of 2020.

 

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