Posted on 02/25/2020 12:30:35 PM PST by Rebelbase
Japanese carrier ONE has joined several of its liner peers in imposing a congestion surcharge on reefer containers destined for major Chinese ports.
Moreover, some carriers are preparing to declare force majeure and leave refrigerated containers at alternative ports.
With the coronavirus outbreak showing no signs of abating in China and still severely restricting landside operations at the ports of Shanghai, Ningbo and Xingang, reefer plug-in points are in extremely short supply, obliging carriers to discharge temperature-controlled boxes at other ports.
ONE has told customers it would apply a surcharge of $1,000 per reefer container, with immediate effect, “to cover additional costs related to the unexpected but necessary arrangement of shipments, and associated plug-in charges and monitoring fees”.
The carrier also said it may need to “adjust the original transport plan”, which could result “in the discharge of reefer containers at an alternative port without prior notice”.
ONE said it would endeavour to arrange relay of the reefer boxes to intended destinations, “subject to reefer plug availability”. However, it would be encouraging customers to consider a change of destination, “especially for time-sensitive cargo such as fresh, chilled commodities”.
Israeli carrier Zim and others have also announced immediate surcharges of $1,000, while CMA CGM will surcharge its customers $1,250 per reefer container. e,
MSC said it was invoking clause 19 of its bill of lading, which potentially gives it the right to leave goods at “any place or port which the carrier may deem safe and convenient”, and to receive full freight with any additional costs incurred for the shipper’s account.
The Loadstar understands that other carriers could follow MSC’s example if the crisis continues.
Meanwhile, insurers are bracing themselves for claims for spoiled contents in containers stuck on terminals in Asia for several weeks.
One marine cargo insurer source told The Loadstar he expected “an avalanche” of claims following the massive supply chain disruption resulting from the virus outbreak, and that, with the vast growth in reefer imports into China, potential claims “could be massive”.
“Unfortunately it is not just about plugging the boxes in,” he said. “A lot of the contents of reefer boxes have a shelf life and the goods will end up being destroyed and a total loss. We know from previous experience that claims can run into tens of thousands of dollars per single unit.”
Indeed, the Swedish Club agreed that damage to reefer container cargo was “both frequent and costly”, and because the cargo was intended for human consumption, “even minor changes in quality may cause authorities to order the complete destruction of the cargo”.
In a more optimistic note, CMA CGM said today that, “subject to further review”, it was planning to resume full operations at its network of offices in China from Monday 2 March.
“Not to mention the sanitation hazards posed by perishable meats and produce festering in hermetically sealed shipping containers sitting on tropical third world docks”
They’ll just dump it into the harbor to be washed out with the next tide change.
“Our leaders need to develop a more rational quarantine/screening procedure that restarts the normal flow of products to the greatest extent possible without spreading the disease to keep the system from breaking down.”
Rational action is not possible when the world population looks to their governments to protect them from everything.
50 years ago this would be a complete non-issue and only rumor of China quarantine would have reached US media.
Today, if 1 million die, people will be screaming in the streets and generally going crazy, putting every government at risk. Personally.
Rational action is not possible. It’s all the irrational from here on out.
Refrigerated shipping container, just bigger versions of the trucks that deliver perishable foods to grocery stores, etc. A load of frozen food will probably be fine, but produce as a example will probably sit and rot.
Too bad because its looking like this virus is not going to be containable no matter what we do.
One should never try to hold the wind because its a futile gesture and waste of resources doomed to failure from the git go.
.
JIT had it’s risks pointed out at inception; but it appears they were poo-pooed away.
https://en.wikipedia.org/wiki/Just-in-time_manufacturing#Potential_risks
Really?
but I guess 1,000,000 'fetuses' are not considered to be PEOPLE; so a million of them, every year, is no big deal.
{cue theme from JAWS}
“You need our food....fine...lower your rare Earths prices!”
From the article: “With the coronavirus outbreak showing no signs of abating in China...”
Actually, if you believe the numbers China is putting out, the virus has been brought under control in nearly all the provinces other than Hubei where Wuhan is located. Many of them are showing zero new cases each day now. Others report one or two new cases per day.
I’m very skeptical that a province of 50 million people with over 1,000 confirmed cases has managed to reduce new cases to zero, but that’s what they’re putting out. If true, we could learn a thing or two from the Chinese on bringing an outbreak in an area under control, but I have trouble believing the numbers. Anyone have insights shared by family or friends over there? I realize it’s difficult to get accurate information.
Something most of the comments regarding the reefers seem to miss is that they generally plug into an electrical supply. The problem on the docks is apparently that they have run out of empty outlets. That’s why the article references dropping off cargo containers at other docks, ones with electrical outlets still available, presumably.
Dude, you’re harshing muh buzz!
Well that is going to make the pork market interesting.
So much for the brilliant idea of shipping our chickens, etc., to China for processing and packaging and shipping them back.
That's crazy talk. A complete embargo on Chinese imports would not cause a complete halt to the US economy. This is they type of scared non thinking that gets us to a DOW of 1,000, LOL. In you behalf, I really don't think you believe that.
I did that already but I will do it again. Pay attention this time OK? Total trade is $4T, $2T imports and 1.4T exports. Total US GDP $22T.
Imports are 2/22 = 9% of GDP.
Exports ( not yet threatened by Corona Scare ) are 1.4/22 = 6% of GDP.
So AT MOST 9% of GDP could be affected. This COULD be an annoying disruption but not a crises.
First off, the issue is not China, the issue is the economic dislocations and supply chain disruptions world wide as a result of stoppages and quarantines from efforts to halt the spread of the virus, which, BTW, are doomed to be futile says the emerging consensus among health care experts who are in a position to know.
Have actually done the supply chain analysis a while back for various scenarios and a pandemic is an interesting case as opposed to a natural disaster as we are seeing unfold.
Quarantines and transport/travel restrictions shut down the flow of finished goods, raw materials and, significantly, work in progress ( WIP) for perishable and non perishable products.
The supply chains are insane and WIP is often routed through a series of value added steps in a diverse network of ( often fly by night) subcontractors, often in multiple third world countries who provide the lowest possible bid.
The logistics of this are often insane as evidenced by situations like American poultry and meats being shipped to China for processing and then shipped back to the US
In other cases its the fact that critical raw materials or subcomponents are sourced from Asian suppliers.
If you can’t get a critical component for your product, you cant make that product.
If you cant make it you cant sell it and if you cant sell it you cant generate revenue.
If you cant generate revenue you cant pay bills or make payroll.
This is a bad thing.
China and our Asian colleagues tend to make and supply lots of critical materials and components that American manufacturers and sellers rely on for their ongoing business. It is not easy to locate a qualified second source, especially if that source is also impacted by the virus caused disruptions
This is also a bad thing as the lack of critical but small component like a chemical, curing agent, catalyst, sensor or processor can shut down an entire production line. Ironically, the availability of a steady stream of other components now becomes a major liability as inventory and bills pile up while production shuts down and idle workers are initially given busy work and then ultimately sent home.
It can be very hard to restart a complex, modern global just in time manufacturing system once the system logistics and supply chain integrity is breached and the system breaks down even under the best of circumstances.
Its even harder when you are dealing with the current system that has developed due to unrelenting pressure to locate the absolute lowest cost supplier regardless of the tortuous but economically viable logistics and the multiple vulnerabilities of the supply chains
As I mentioned earlier, a pandemic presents a very unique case. The downside risks are substantial and the fallout is going to be interesting to say the least
The downside risk is magnified by the potential that our decision makers will make bad decisions that make the situation worse than it needs to be. It would be a mistake to underestimate the downside risks we are facing
This is already happening
We just don’t import that much for this to be catastrophic to our economy. 9% of GDP are imports. Can you do me a favor and tell your friends on K Street to tone it down. You are scaring the old people.
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