Shanghai COVID Lockdown

This morning’s update regarding Shanghai COVID lockdown restrictions:

• PVG airport closed from today until April 1. PVG is the main international airport for Shanghai. Hongqiao airport will close from April 1 through 5. Hongqiao is mostly for China Domestic Flights and Inter-Asia flights.

• All Shanghai area factories will be closed. Most factories are not in Shanghai area, but are located outside the area surrounding Shanghai, in Jiangsu/Anhui/Zehjiang Provinces. But the major problem is that the factories outside of Shanghai cannot deliver freight to Shanghai Ocean Ports because trucks are not allowed to enter Shanghai area. Cargo now can only be shipped from these Provinces by either trucking to Ningbo or using river feeder ports to get to Shanghai Loading Ports (Waigaoqiao and Yangshan).

Direct Translation from official Chinese Document sent locally, as follows:

Traffic Control Notice

At present, the latest situation of Shanghai terminals, airports and port areas.

1. After the efforts of SIPG, each truck fleet and driver:

After coordinating with relevant departments, it is now known that before 24:00 on March 28, the driver of the truck can pass by presenting the current task and the negative nucleic acid report within 48 hours with the “Shanghai Port EIR APP”. However, some on-site execution may be delayed, please actively cooperate with the truck driver and fully understand.

• The pick-up points and return yards around Yangshan Port Area and Waigangqiao Port Area are partially open and will be closed on the evening of March 28.

• All the warehouses in Pudong New Area are open for operation all day today, arranging packing and entering the port. The operation of picking up and returning empty containers shall be carried out quickly according to the current actual situation during the emergency confirmation with each Pudong yard.

• Yangshan Port Area and Waigaoqiao Port Area will work all day and will not be closed.

• The drivers of each team have successively received phone calls from their neighborhood committees that they will all return to their residences for nucleic acid testing after work is over today.

• Drivers who have left Shanghai to pack boxes will rest in place according to the instructions of each team, and will return to Shanghai after further notice from the team.

• At present, I have received feedback from the driver who left Shanghai in the front, and they can enter and pack boxes in various places and abide by the epidemic prevention policies of various places. The driver’s door is sealed, and the driver cannot get out of the car.

• The airport warehouse is currently receiving goods normally, and the airline cargo terminal is being closed one after another. We will wait for further notice.

Shanghai locks down as COVID surges in China’s financial hub

Excerpted from Reuters.com

SHANGHAI, March 28 (Reuters) – China’s financial hub of Shanghai launched a two-stage lockdown of its 26 million residents on Monday, closing bridges and tunnels and restricting highway traffic in a scramble to contain surging COVID-19 cases.

The snap lockdown, announced by the local government late on Sunday, will split China’s most populous city roughly along the Huangpu River for nine days to allow for “staggered” testing by healthcare workers in white hazmat suits.

It is the biggest COVID-related disruption to hit Shanghai, and sent prices of commodities including oil and copper lower on fears that any further curbs could hurt demand in China, the world’s second-largest economy. Read more.

ARE YOU PROPERLY INSURED?

Every Shipper Needs Cargo Insurance

Global trading involves risk; having marine cargo insurance minimizes your financial risk. However, having general insurance often does NOT cover cargo and transportation damages and loss. Have you purchased Marine Cargo Insurance?

Bills of lading terms and conditions usually impose the following limits on liability:

Ocean Carriers……………………………$500 per shipping unit (a shipping unit may be defined as one ocean container).

Air Carriers…………………………………$9.07 per pound

Truckers……………………………………$.50 per pound

The insurance we offer is competitively priced and insures approved merchandise against physical loss or damage from external causes. By purchasing cargo insurance, you can avoid inconvenience and frustration. Contact your BOC Representative at 617-345-0050 for your free quote.

Did you know:

• Many carriers will not take responsibility for loss or damage if a warehouse signs off clean on a POD, so it is important, before signing off, to note the condition of the cargo. Claims are usually time-barred, unless filed within a few days (standards vary by carrier). So alert your carrier to possible damage immediately. The best way to do this is by signing the delivery receipt notating damage! And be specific, for example, 8 glasses broken, 10 boxes crushed (Make ensure that you have the correct boxes or pallet count).

Shippers who rely on suppliers to furnish cargo insurance or who rely on their carriers to take responsibility for losses may be in for a big surprise. Protecting your investments by insuring your goods provides peace of mind.

According to internationally accepted trade terms, referred to as Incoterms, suppliers selling CIF are responsible for arranging cargo insurance. But just because your supplier has the obligation to arrange insurance under CIF terms, it doesn’t mean that they are ultimately responsible if your product is lost or damaged during transit. The ultimate burden of loss falls upon you, the buyer. This is why many experts recommend importers change their buying terms to control the selection, and thereby the quality, of insurance coverage.

Foreign suppliers and their forwarding agents often tack on placement fees to the insurance costs. Those added fees often inflate the cost of insurance well beyond market pricing for the same coverage purchased in the United States. Find out how much you’re really paying and then compare quotes received from BOC International.

Importers relying on their suppliers to arrange insurance run the risk of having inadequate insurance coverage. Cargo insurance policies can vary widely in levels of coverage, deductibles and special restrictions. Ask your supplier for a complete copy of the insurance policy or for a certificate of insurance detailing all the policy terms and conditions

Importers are encouraged to make certain their suppliers use insurers with a favorable financial rating supplied by a respected financial rating service. BOC’s insurance company, underwriters at Lloyd’s of London, has an A.M. Best financial rating of A (Excellent).

Ask your supplier for a list of insurance claims adjusters contracted by the insurance company. Adjuster and surveyor networks approved by Lloyd’s of London and AIMA are among the most credible. BOC has a vested interest in your insurance needs and will directly handle cargo claim documentation requirements to ensure prompt processing and timely settlement.

General Average

• Basic principle – that which has been sacrificed for the benefit of all shall be made good by the contribution of all.
• Applies to maritime claims only.
• Is declared by the captain when there is imminent danger to the vessel, voyage or crew.

You are contractually obligated, via the Bill of Lading, for unknown and undetermined costs. 

How does it work?

• Value of the voyage is determined (vessel value plus value of all cargo on the vessel.)
• Participation is determined by the percentage that the value of your cargo bears to the overall value of the voyage.
• The loss amount is determined, and participation percentage is applied to the loss amount to determine security deposit.
• Shipper or their cargo insurer pay twice – first for the initial contribution, then for a bond covering future adjustments to that estimate.

Are you familiar with GENERAL AVERAGE?

Ever Given, year built 2015, 199,692 dwt Date of Blockage: 3/23/21 Part loaded with 18,000 teu (capacity 20,000 teu.) Egypt alone believes it is owed at least $1 billion in compensation for the six-day shutdown and the cost of the refloat effort.

Yantian Express, year built 2002, 100,003 dwt Date of loss: 1/3/19 Part loaded with 4,000 teu (capacity 7,551 teu.) 198 total loss, 462 damaged required survey LOF salvage – security 32.5% GA – security estimate 28%

APL Vancouver, year built 2013, 115,060 dwt Date of loss: 1/31/19 Part loaded with (capacity  9,200 teu.) 947 containers affected LOF salvage – security 15-20% GA – security

ER KOBE, year built 2001, 68,196 dwt Date of loss: 2/24/19 GA declaration on March 12, 2019 NO SEPARATE SALVAGE CLAIM GA – security estimate 10%

There are a number of notable fire cases, with many resulting in General Average!

• Ever Given – April 2021
• Sincerity Ace – January 2019
• Maersk Honam – March 2018
• Maersk Kensington – March 2018
• Hyundai Auto Banner – May 2018
• MOL Prestige – February 2018
• Caribbean Fantasy – June 2018

And most recently, the ZIM Kingston, in Fall 2021. Containers fell overboard, causing damage to the vessel in the process, and all cargo owners on board the vessel had to share in the costs, based on the value of their freight on board.

Hidden Costs

• LCL Freight – Freight is not released until all payments received.

Difficulties of preventing and extinguishing fires on the open sea, include:

• Ships are larger with more varied cargo.
• Crew are ill equipped to deal with these fires.
• Fire-fighting tugs are often days or weeks away.
• Prevention is difficult, with rising problems with mis-declared cargo.
• IMDG Code is evolving to impose stricter rules on dangerous goods (DG.)

Problems Facing the Industry

• Stricter rules on DG will lead to higher costs and more incentive on the part of shippers to avoid proper declarations
• Ship owners and shipbuilders need to improve fire-fighting capabilities with CO² systems being shown to be inadequate – cost benefit analysis
• National Cargo Bureau in NY found in 2017 that of 1,721 stowage plans inspected, 20% showed errors with DG

General Average will never go away

• Awareness across all business units that losses & delays are part of any supply chain. Mission-critical shipments need more risk analysis to determine transport mode.
• Understanding of what to do when General Average occurs. This is best led by your cargo insurance provider meeting with your ‘team,’ not just the risk manager or CFO.
• Have a contingency plan or at least an understanding of how the event will unfold.

MAKE SURE YOU ARE COVERED! Ask the questions. Do not assume.

Evergreen Containership Aground Near Baltimore

PUBLISHED MAR 14, 2022 4:08 PM BY THE MARITIME EXECUTIVE

One of Evergreen Marine’s large containerships, the 12,118 TEU Ever Forward grounded overnight on the Chesapeake Bay shortly after departing Baltimore, Maryland bound for Norfolk, Virginia. The U.S. Coast Guard Fifth District reports that the vessel remains aground while they are coordinating with the shipowner to refloat the vessel.

The 1,095 foot Ever Forward, built in 2020, departed Baltimore with AIS data showing it was traveling between 8 and 13 knots. The vessel was proceeding with a pilot aboard. The Coast Guard reports that it was informed around 9:00 p.m. March 13 that the vessel was aground off Gibson Island in the Craighill Channel. Local experts on the Chesapeake Bay are suggesting that the vessel is outside the channel possibly having missed a turn. Captain Matt Benehoff of the Annapolis School of Seamanship visited the site and in a video on social media highlights the channel markers. They are reporting that the low water in the area averages 24 feet and the vessel normally draws 42 feet. Pictures show the vessel heavily loaded.