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Congestion is the new outbreak

Congestion

China has officially joined the congestion spectacle…

Ocean Network Express (ONE) announced a $1,000 surcharge on cargo bound for Yantian. Currently battling severe congestion, the bottleneck at Yantian Port has rippled its way to neighbouring ports like Shekou and Nansha.

Increased infections blamed

After an outbreak of 150 cases in Guangdong, government authorities are stepping up efforts to contain the virus. Apart from Yantian port, Shekou, Chiwan and Nansha have suspended entries for the vessels with no prior reservations. Those vessels in transit are required to place reservations between 3 and 7 days before arrival. In addition, major shipping lines have issued advisories warning of delays and imposed surcharges due to diverted routes and shortage of transport resources. Major carriers named the virus as the reason behind plummeting port efficiencies; Maersk reportedly estimated a 70 per cent reduction in terminal productivity.

Continual delays and disruptions are not expected to alleviate any time soon according to industry observers. ONE’s rationale for surcharge was additional costs related to the unexpected but necessary arrangement of shipments and relevant charges. ONE’s advisory added congestion charges and Change of Destination (COD) administration fees can be waived if the port is anywhere but Yantian. Skyrocketing surcharges have since compelled shippers to find alternative ports and Yantian’s reputation as a busy port nosedived.

Inflation sets in

Shenzhen-based Institute of Contemporary Observation monitors the working conditions in hundreds of Chinese contract manufacturers. Liu Kaiming, the institute’s head noted: “Some customers have complained that the price of sourcing building stones from China has exceeded that of sourcing from Europe because of high freight costs.”

Dr. Johannes Schlingmeiner of Container xChange also observed cargo owners were reduced to using shipper-owned boxes (SOCs) for urgent consignments to save costs. Moreover, carriers might not even accept SOCs given it can be hard to track. There are also cases of missing cargoes – where the carrier cannot pinpoint the location of the missing goods. Therefore, the risks of lost cargoes from owners’ own boxes are much higher – contributing to inflation.

 

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