Liners Turn to Surcharges as Reefers Get Diverted amid Plug Shortage at Chinese Ports

The ongoing outbreak of novel coronavirus has resulted in reefer shipments being diverted and relocated amid a shortage of reefer plugs on shore at certain Chinese ports.

Refrigerated containers, commonly referred to as reefers, are used for the transportation of perishable goods. When unloaded at a terminal they need to be connected to a reefer plug on shore to keep the goods refrigerated until they are picked up by a truck and taken to their final destination.

Hong Kong-based container shipping company Orient Overseas Container Line Limited (OOCL) said that challenges to the discharge and handling of reefer shipments at the Shanghai, Tianjin, and Ningbo terminals continue to persist because of the extraordinary demand for reefer plugs.

“This may lead to a diversion or relocation of reefer containers for discharge at an alternative port and we are currently working very closely with shippers on contingency plans and viable options to meet their requirements. OOCL has also been proactively suggesting our customers to collect their reefer shipments at their earliest convenience and providing them with recovery plans to minimize the potential impact,” OOCL said in an advisory.

The company has started to reopen some of its offices in China and resume regular operations.

“For some offices that have yet to reopen, our IT strength and capability have been providing us the operational agility we need to successfully continue our work with the customers, such as booking acceptance, contingency planning, and other related services,” the company added.

Ocean Network Express (ONE) also pointed to the slow inbound container pick-up activity at Xingang
(Tianjin) and Shanghai terminals caused by the outbreak and the extension of the Lunar New Year holidays, which resulted in a serious shortage of available reefer plugs.

ONE said that this may result in the discharge of reefer containers at an alternative port without prior notice. The liner company said it would try to arrange for the discharge at an originally intended destination where possible, adding it would encourage customers to change their destinations to other ports especially for time-sensitive cargoes such as fresh, chilled commodities.

At the same time, ONE has decided to apply a congestion surcharge (CGD) of USD 1,000 per container to cover additional costs related to the unexpected arrangement of shipments and associated plug-in charges, monitoring fees etc.

Maersk has also introduced a congestion surcharge of USD 1,000 per container for all reefer cargo arriving into Shanghai and Xingang to cover the additional cost of re-routing.

Furthermore, the company’s staff in China is working from home until the end of February in order to be available for customer support.

To mitigate the effects of the ongoing situation, the company has also had to blank several sailings on its Asia Westbound and Asia Eastbound services.

“Due to ever-changing versatile situation, we are likely to announce more blank sailings on short notice. With the only intention of serving your needs to best of our capabilities during the challenging weeks ahead, we will shift your cargo between vessels as means of minimizing the delay,” Maersk said in an advisory.

CMA CGM has introduced a port congestion surcharge of USD 1,250 per reefer container to cover for additional costs incurred by the need to relocate containers from congested Chinese terminals.

This measure is effective immediately for all reefer cargo arriving into Shanghai and Xingang from February 15th, 2020 onwards, and for regulated trades as of March 14th, 2020 until further notice.

ONE has suspended new bookings to/from all ports in Hubei province including Wuhan for the time being.

“Our staff will continue to liaise with customers who have shipments already in progress to discuss the most appropriate course of action for these,” ONE said, adding it is closely monitoring the impact of this incident.

In its latest update, German liner Hapag-Lloyd said that its offices in China except Wuhan are open with selected staff members for critical tasks.

“Business operations are being supported by our staff working remotely with access to the Hapag-Lloyd network. Counter services have been resumed work as from February 11 on the basis of appointment with our local offices,” the company noted.

“All terminals and depots are now open. However, some are still operating at limited capacity. Furthermore, truckers shortage remains an issue.”

Based on the latest information from the World Health Organization (WHO),  there have been 71, 429 confirmed COVID-19 infections around the world, out of which 70, 635 are from China.

The death toll in China stands at 1,772 people, with three deaths recorded outside China, those being in France, the Philippines, and Japan.

World Maritime News Staff