The Chinese government has introduced various preventive measures to suppress the expansion of coronavirus, and has also slowed down economic activity. In April, there were signs of economic recovery in China, and factories restarted operations and resumed exporting goods. On the other hand, because of the coronavirus pandemic in the US, city lockdowns and curfews have led to closures of freight warehouses, and freights have been left without being picked up at these locations. Additionally, in conjunction with the decline of shipping capacity, empty containers have piled up without being returned to Asia (China). Therefore, the Port of Los Angeles has overflowed with uncollected and empty containers
3. The Issue of Cost Burden
Another significant issue caused by the coronavirus for the shipping industry is determining who shall bear the additional cost to vessels from quarantine restrictions or delays while waiting for port authorities to grant clearance to enter port. Many owners of cargo vessels have now asserted that the force majeure clause is applicable in cases of detention or delay of cargo caused by the coronavirus. Consequently, owners of cargo vessels and shipping companies have entered into severe disputes.
To avoid this, Japan P&I Club has recommended to include infectious disease clauses that are comprehensive and clearly allocate rights and responsibilities in the event of an outbreak to Time and Voyage Charterparties, which have been produced by BIMCO (Baltic and International Maritime Council).
The cost of freight cargo shipments has not changed much from February to March, and it’s clear that the decline in freight capacity has contributed these locked rates. Additionally, the issue of empty containers in many ports may be a potential hindrance for a smooth recovery of the global economy.
Also, as I mentioned before, owners of cargo ships have faced an increase of container storage and drayage costs. Furthermore, owners must negotiate with shipping companies to share costs caused by the delay. We may see harmful repercussions of these issues reflected in our economic activities.
Leng, S. (2020, 4 15).
Coronavirus: container traffic at China’s top eight ports plunges in early April as pandemic hits overseas orders.
Retrieved from South China Morning Post: https://www.scmp.com/economy/china-economy/article/3080041/coronavirus-container-traffic-chinas-top-eight-ports-plunges
The Port of Los Angeles. (2020, 4 10).
. Retrieved from https://www.portoflosangeles.org/business/statistics/container-statistics