COVID-19 repercussions for exporters, importers and insurers

Between delays and temperature exposures, event cancelations and general uncertainties around COVID-19, the marine industry has had its fair share of challenges during the pandemic. As restrictions continue to develop, many importers and exporters are facing additional obstacles. Several companies, including OOCL and CMA Group, joined Hamburg Sud and Maersk in significantly cutting their services to New Zealand because of the recent embargo imposed on import bookings from Europe.

These recent developments are said to be a result of:

  • Severe port congestion in Singapore, Malaysia and Taiwan due to containers still waiting to be shipped
  • A lack of empty containers in key markets, including China and Australia
  • Port strikes and delays in Australia
  • Additional, unanticipated shipments coming from China
  • Bookings out of China are not being accepted for four to five weeks or empty equipment is not available for use, especially 40’ containers. This is especially true in the smaller regional ports that are usually serviced by “feeder” vessels that take the cargo to the larger “hub” ports. There is simply not the capacity on these feeders to move the high volume of cargo.
  • Reduced sailings — meaning that in some cases, containers are trucked long distances, often over 1000km, to alternative ports to reach ships on time for departure to New Zealand.
  • Limited storage capacity. Recently, MetroPort in Auckland ran out of space to receive containers for export and had to close its gates, leaving export clients with two clear choices: truck the containers to Tauranga or other ports at their own expense or miss the intended vessel.
  • A lack of infrastructure. The port of Tauranga has experienced lengthy delays in getting containers on and off the wharf.

From these developments, effects have been:

Crew concerns

As many importers and exporters face these significant challenges, they’re left with no alternatives other than air freight, as COVID-19 restrictions prevent crew from leaving their vessels when calling at ports around the world. This means somewhere between 250,000 and 350,000 crew members have been on board the same ship for more than 10 months with no shore leave or family visits. Aside from the obvious mental health issues this causes, we fear it will be a matter of time before some crews refuse to sail any longer. It is also worth noting that Maritime law stops any crew from completing more than 13 months continuously on board the same vessel – a period of time that is fast approaching.

Claims concerns

As surveyors, we have already seen containers being used that are in poor condition, allowing water entry, among other issues. Attempts to get cargo here quickly through a combination of air freight and sea freight has resulted in damaged goods due to rough handling methods. Extended transit times, trucking containers being sent to alternative ports and lengthy transshipment stops have increased the time that containers are at risk of being damaged. Containers awaiting uplift from the wharf could be damaged due to wharf congestion and port staff working under pressure. If containers are already damaged, they could be at risk of being exposed to adverse weather. In addition to an increase in air freight costs, sea freight costs have risen significantly, with some having doubled in the past 120 days. Delays in getting repairs completed on damaged imports — due to the length of time it takes to get parts from Europe and Asia —could have implications on business interruption claims as well.

The impact of COVID-19 on the marine industry is changing rapidly and we want to assure our clients that we are here to help. Here are some resources that may help answer additional questions, or you can always reach out to us for further support.

> Read our blog about how COVID-19 is impacting the marine industry

> Visit Sedgwick's COVID-19 update center

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