Ocean container carriers urged to allow extended ‘free time’ without penalties at key ports due to coronavirus disruption of global supply chains

Compiled by Bruce Abbe, strategic advisor for trade and transportation

The rapidly expanding outbreak of the novel coronavirus is causing major disruptions to global supply chains and international public transportation.

On Monday, the national Agriculture Transportation Coalition (AgTC) publicly called for container ocean carriers to extend a period of ‘free time’ allowed at port terminals so that container shipping exporters and importers would not get hit by unfair per diem penalty charges when their freight gets held up for events beyond their control.

The government of China – where the virus got its start – announced it has extended the official lunar new year holiday period, which started Jan. 25, for three more days through Feb. 9. The Chinese New Year holiday, as it’s often referred to, traditionally brings a significant slow-down in trade and freight transportation from Asia. China essentially bought some time by extending the holiday period throughout the country by three days to provide more limited interaction of people before shipping and commerce restart in a big way. News reports, however, note the shipping slowdown due to coronavirus may now extend well beyond out into March.

Industry sources note more ship sailings are being cancelled, on top of the trend of blank sailings that grew steadily in number throughout last year due to overcapacity during the U.S.-China trade war.  We’re hearing that multiple ports in China have been waiving storage fees on cargo, but the ocean carriers have been silent as of this writing on extending their higher cost detention and demurrage penalties beyond Feb. 9.

In an open letter to ocean carriers AgTC Executive Director Peter Friedmann said AgTC members – including the Specialty Soya and Grains Alliance (SSGA) – appreciate that most of the steamship lines have extended their free time periods in line with China’s extension of the Lunar Holiday for three days. Friedmann also urged more time be allowed due to the extreme global crisis situation.

“We now seek further guidance with regard to our export cargo landed in China, or imports marshalled for and awaiting export. Unfortunately, the World Health Organization (WHO) and national health agencies predict the coronavirus will be a threat well beyond Feb. 9,” Friedmann wrote, pointing out efforts to suspend cargo and passenger movements to prevent the spread of the virus can also be expected to extend beyond that period.

Friedmann called for ocean carriers to announce they will extend ‘free time’ beyond Feb. 9 and “until such time that the WHO, national authorities and/or air cargo carriers believe normal transportation services at the ports and inland China can safely resume.”

“While this is open-ended, our U.S. exporters need assurance they will not be charged detention (per diem), or demurrage while the supply chain remains dysfunctional due to the coronavirus,” Friedmann said. He also expressed shippers’ readiness and desire to work collaboratively with carriers to mitigate the impact of the global health crisis.

The accelerating negative impact of the coronavirus on shipping and commerce, comes on top of the decline of trade last year due to the U.S.-China trade war. Freightwaves/American Shipper reported last week that 2019 was the first year in more than a decade that saw container trade on the Trans-Pacific actually decline.

Click here for coverage by the Journal of Commerce on the coronavirus impact on the container trade.