Market Matters Blog
Coronavirus Causing Major Headaches for Container Shippers
Agricultural shippers, including Specialty Soya and Grains Alliance (SSGA) exporters, are feeling the pinch at overseas destinations and here in the U.S. due to the effects of the coronavirus outbreak, according to Bruce Abbe, SSGA strategic adviser for trade and transportation. Abbe said exporters of soybeans and specialty agricultural products in the upper Midwest have begun to experience problems getting all of the empty containers they need.
"It's blank sailings compounding other blank sailings," Abbe said. "Canceled sailings and staff shortages at shipping lines and warehouses across Asia, especially in China, are limiting the volume of Asian exports to the United States. Spot shortages of containers are surfacing near hubs such as Chicago and Minneapolis."
According to the Universal Cargo website, blank sailing is a term that means no sailing or, perhaps more precisely, canceled sailing. A blank sailing could refer to a sailing skipping one specific port (while still traversing the rest of the scheduled route) or the entire sailing being canceled.
Abbe told DTN that he has heard some mixed feedback, with one shipper on Feb. 27 telling him that, while it hasn't been that bad in the Twin Cities, they're watching it and are aware of shortages in some places.
"One perennial thing for our Identity Preserve (IP) guys is a shortage of 20-foot containers. Therefore, it may be that there are some 40-foot containers available in some locations. But, overall, with the higher blank sailings, equipment shortages are going to happen," Abbe said.
I also contacted an IP shipper of soybeans who told me that the shortage is "a horrible mess and very frustrating" and that his company is trying to make the best adjustments possible.
Abbe noted in a Feb. 25 story published in the SSGA E-News that member shippers found the impact is indeed beginning to hit exporters in the U.S. "One SSGA freight forwarder member noted that the immediate problem is dealing with all of the blank sailings that keep increasing. Shippers cannot get bookings until April and those may end up getting pushed out even further if there is not a turnaround," said Abbe. "Container shipments are being rolled to later departing ships, and it's a scramble to find a vessel going to the planned destination, with delivery dates an increasing unknown."
Mediterranean Shipping Company (MSC), a global business engaged in the shipping and logistics sector, and present in 155 countries, has -- like other container companies -- fallen victim to the effects the coronavirus is having on shipping. I met some of their customer service team at the 2019 U.S. Soy Global Trade Exchange & Specialty Grains Conference and learned that MSC offers their services to growers, farmers and producers of agricultural products around the world, along with many other industries.
On Feb. 12, the company posted a news release on their website saying that, "Due to the effect of the coronavirus outbreak, Chinese ports are congested and it results notably in a lack of available plugs for reefer (refrigerated) containers. As a matter of fact, MSC cannot secure the discharge of reefers containers at the designated port if power source may not be available.
"Consequently, at ports where it is not possible to discharge some or all reefer containers, MSC has no option but to apply clause 19 of our Bill of Lading and Sea Waybill Terms and Conditions. It means that your reefer container(s) may be discharged at an intermediate or alternative port and held there until it is possible to forward them to the designated port of discharge. In case the situation remains unchanged, it may be necessary to abandon the voyage and advise you from where your container(s) may be collected," added MSC.
American Shipper reported in a news story on their website on Feb. 17 that the reefer container export trade was among the earliest hard-hit sectors. "Perishables are imported in refrigerated containers or reefers. When they're unloaded at the destination terminal, they must be connected to power via reefer plugs until they're picked up by trucks," noted American Shipper. "Terminals only have so many reefer plugs, and given delays in inland truck transport due to coronavirus restrictions, reefer plugs are now full in several top Chinese ports."
Most, if not all, of the product in a reefer container has a shelf life, and delays getting to the destination and unloaded in a timely manner could cause contents to spoil and be destroyed. The trickledown effect is that shippers may pay higher shipping costs and eventually pass that on to the consumer. Worst of all, some of that food being held up may not be getting to people who need it.
On a more positive note, Abbe noted in the article that he checked with an SSGA bulk grain member exporter and found that the large bulk vessel grain and soy shipments appear to have not yet been hit with cancelled sailings and diversions.
Abbe said that, right now, SSGA member shippers and their logistics providers are doing their best to find workarounds to serve their customers. "Visibility, particularly on estimated times of arrival, is a hard item to come by at the moment. It's a critical time for SSGA shippers to make extra effort to maintain close communication with customers and supply chain service partners," concluded Abbe.
Mary Kennedy can be reached at email@example.com
Follow her on Twitter @MaryCKenn
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