CONGESTION IN LOGISTICS
Many wonder where the present congestion in seaborn logistics originates from, since it has never been such a messy situation before, for so long! First of all, want to clarify that ships sail on time but that the delays have, in 99.99% of the cases, their cause in shore-side operations (indeed an incident like Mv. Ever Given aside). Present delays and congestion, well, there are numerous reasons and causes, for instance in 2020 industries scaled down their stocks, anticipating that the Covid pandemic would give a blow to their business. What happened, in western countries many people who spent money on their holidays now started spending money on their homes, hobbies etc leading to a demand in building materials, tools, bikes, spareparts etc. At the same time, production facilities were affected by workers who attracted Covid or else, measures taken by authorities due to Covid, putting labor, cities and factories in quarantaine in order to contain the pandemic. Consequently a higher demand in various goods and declined output from manufacturers. A perfect storm!
The biggest workshop in the world, China, took drastic measures to isolate Covid and bring it to a stop. This caused a disruption in labor, shipping and logistics availability. Many wonder why after more than a year of Covid pandemic the logistic chain is still not upto speed and adapted to Covid.
Well, in China the measures are still very very strict and foreign flag shipped are considered a possible Covid source. This results in delays due to shortage of pilots. Not that there are not enough of them but once a pilot has taken in a vessel from a foreign destination (as last port) the pilot has to go into quarantaine for 14days. Consequently, it can be the case that 1 pilot is available only twice a month!
This happens at all Chinese ports but the number of arriving ships, in view of the huge demand in goods like containers but also breakbulk steels, projects, roro etc., is not decreasing, actually increasing. Breakbulk and project cargo ships are more affected since containerships have some preference. Once the queue of some 10-15 days waiting has passed, the loading/discharging operations have to start. However, stevedores, lashing crews and welders can work onboard a ship coming from a foreign destination and once finished will also enter a 7-14 days quarantaine, consequently another delay builds up for the next breakbulk and project vessel. A general cargo vessel can thus be stuck in a Chinese port for upto as much as 30 days!! Another complicating factor is that ships sailing from Europe to Far East usually called India/Pakistan but now avoid these countries in view of the quarantaine time implemented at Chinese ports. This gives additional pressure on cargoes destined for India/Pakistan since less vessels available for these cargoes, thus increasing demand and consequently rates!
That is for breakbulk and conventional ships. But for containerships the delay is less but still considerable. Imagine all those containers which are onboard, not discharged/loaded timely, donot get to the factories to get stuffed and are sitting idle onboard ships queuing up, waiting for berth. This results in demand for alternative routing, use of breakbulk ships/space etc, a domino effect!
For cargo interests there is another issue: with whom do you contract your cargo and have you carefully looked into your terms and conditions? Think of the situation that operators, who have to have sufficient cash to pay the time charter hires and owners should have their calculations and operations correct, are defaulting with your cargo in their hands. What is your legal position? How are you covered and protected? Have you carefully negotiated your contracts or you were led by the ‘cheap freight’ and neglected the terms and conditions as ‘exchange money’?
These are far reaching issues. Have you considered these? We are able to assist you in your contractual question, negotiations and claims, contact SeaWorks by CHARTERING@SEA-WORKS.COM or Tjeerd.firstname.lastname@example.org