Shipping company will suspend receiving part of South China port cargo

According to foreign media reports, shipping companies such as Orient Overseas (OOCL) and Ocean Alliance Shipping (ONE) announced that they will suspend bookings in some southern China ports starting next month, due to the decline in the capacity of local barge operators.

OOCL said that due to the quarantine regulations caused by the new crown pneumonia epidemic, crew changes have been affected, and the available barge operation and maintenance capabilities have dropped significantly. The company will suspend bookings at South China Ports from January 11 to February 23, 2021. ONE also issued a similar announcement, with restrictions starting on January 5 and continuing until February 26 in some ports. The so-called suspension of bookings can actually be understood as "empty suspension." It is understood that the affected ports include Guangdong, Guangxi, Hainan and Fujian.

The main reason for the decline in barge operation and maintenance capacity is the chain reaction caused by the problem of crew shifts. According to a document sent to a customer by a barge company in the Pearl River Delta region, due to the impact of the epidemic prevention department’s policy (as long as the barge’s last flight has passed Hong Kong-Mainland, the crew must go to a designated place to isolate for 14 days if they want to change shifts) The cost of shifting shifts has caused the crew of the barge company to have not received effective rest since they boarded the ship in February 2020. The Spring Festival is approaching, and the crew is very eager to take a break. The barge company has decided to take a holiday from January 20, 2021 to February 21, 2021. Therefore, barge services to Hong Kong and Macau cannot be provided during this time period.

Lars Jensen, CEO of SeaIntelligence Consulting, pointed out that although the mainline ships are not covered by the suspension, the Covid-19 epidemic prevention regulations indicate that “due to the decline in the service capacity of barges, it will affect the entire southern China feeder market”.

In fact, according to local freight forwarders in South China, other shipping companies may also suspend bookings. Peter Sundara, vice president of global marine products for Hong Kong-based LF Logistics, said that this will affect the internal transportation of Asian ports and the cargo connections between feeder ships to Hong Kong ports and main ports in southern China. Coincidentally, as of press time, CMA CGM announced that it would stop accepting bookings from Asia to Europe in the next three weeks.

Why can barge services have such a profound impact on the operating conditions of the Pearl River Delta ports? This has to mention the collection and distribution methods of the ports in the Pearl River Delta.

In the Pearl River Delta ports, due to the well-developed Pearl River system, barge transportation is cheaper than trailers, and regular schedules have been realized, attracting many Pearl River Delta cargo owners. Many international liner companies have also begun to transport containers in and out of the Pearl River Delta by barge.

Compared with the case-by-container declaration for land transportation, seaborne customs declaration is an additional cost and operating procedures incurred by multiple declarations per ticket. Because land transportation has to cross different customs inspections, it takes time and effort, while sea transportation can pass the local customs once, avoiding second inspections. Under the situation of rising production costs, barge transportation saves freight and manpower, and improves the market competitiveness of export products.

Accordingly, the barge companies in the Pearl River Delta provide a wealth of services, including waterway transportation of foreign trade containers from ports in the Pearl River Delta to Hong Kong and Macau; international container waterway transportation via Hong Kong, Shenzhen or Guangzhou to all parts of the world; and ports in Hong Kong or Guangdong Province Waterway transportation of various bulk and groceries. Due to the repeated outbreaks of the epidemic in Hong Kong this year, the epidemic prevention of ships involved in Hong Kong has been tightened, resulting in the failure of the crew to change shifts in time and get rest.

This time, a number of barge companies have issued announcements to provide crew members with a one-month rest period. Barge is an important part of the collection and distribution link. After a large area of operations ceases, is it possible for the collection and distribution of trucks to fill this gap? According to current judgments, it seems difficult.

Twings supply chain sales manager David Fan said that in the Pearl River Delta, more and more shippers use trucks instead of feeder ships, which means that the freight for importers and exporters will increase. He explained: “In view of the increased demand, there is usually a shortage of truck drivers during the holidays.” At the same time, the freight of each container land trailer is about 20% more expensive than the barge. In the case of already high sea freight, if the land transportation cost is Going higher is not a small burden for cargo owners.

David Fan added that although the shipping company announced the suspension of bookings due to quarantine requirements, the main reason may be the lack of empty containers and the "underload". Indeed, there are reports that due to a long-term lack of empty containers, ships leaving China are underutilized.

For shipping companies, there are two benefits to stop accepting space reservations: First, it can digest orders that have been received before; second, after nearly a month of empty container allocation, it will help alleviate the current shortage of containers in China’s ports. status.

From this point of view, until the Spring Festival, there will be no possibility of any reduction in freight rates, the tightness of empty containers will not be relieved, and no bookings will continue. The entire foreign trade supply chain may welcome a new one in the magic. year.