Update (February 3): The impact of the coronavirus is rippling across global supply chains with many ports taking advanced security measures while several liner services from China have been called off due to reduced demand, following the government’s holiday extension in response to the outbreak.
Reduced demand due to the extended holiday period, has led Maersk to announce blankings of its AE7 and AE15 services starting westbound in weeks six and seven of 2020.
Numerous Chinese ports have begun offering lower port charges as Chinese industry slows down, while several ports are struggling with a lack of stevedores and truck drivers.
Meanwhile, ports across the world have stepped up their security procedures, with all vessels that have called at any Chinese port now required to submit a Maritime Declaration of Health at Felixstowe in the UK.
The Maritime and Port Authority of Singapore (MPA) has implemented temperature screening at all sea checkpoints, including PSA Terminals and Jurong Port, in response to the Wuhan coronavirus.
As of January 24, 2020, inbound travellers and ship crew are to undergo temperature screening conducted by on-site healthcare assistants with suspect cases being referred to hospitals for further assessment.
The MPA has put up health advisories at the sea checkpoints to advise people on the precautionary measures to take when travelling, as well as to remain vigilant and adopt good hygiene practices at all times.
Additionally, leading maritime law firm Hill Dickinson has warned that the shipping industry needs to be prepared for potential restrictions in order to prevent the further spread of the coronavirus.
Beth Bradley, a partner with Hill Dickinson, explained that shipping should be prepared to face the same issues that arose in previous severe disease outbreaks such as with other coronaviruses or Ebola.
These issues included infection of crew members, quarantine measures, closure of ports and possible repercussions on charter party obligations.
She added: “While this outbreak is not currently anticipated to cause the global complications experienced by the Ebola and Sars outbreaks, it is wise for ship operators and charterers be prepared for any greater spread of this virus.”
A contagious disease may legally make a port unsafe if proper precautions and protective measures are not in place to ensure a vessel can call at the port without risking infection of its crew.
During the Ebola and MERS outbreaks such protective measures were taken and numerous ports remained open despite being affected by the outbreak although currently the Wuhan virus is not at a stage where it may render a port unsafe.
The severity of the outbreak would need to significantly escalate before owners could reasonably refuse to call at scheduled or nominated ports on the basis of the ports being unsafe, Hill Dickinson explained.
John Agapitos, Hill Dickinson paralegal, said: “At this time there have only been internal transport bans affecting certain Chinese cities around the centre of the outbreak. There has not yet been a travel ban to China or any other neighbouring countries.”
However, he added, if the outbreak escalates in the future and/or travel bans are imposed questions of whether it amounts to a force majeure event may come to the fore.
A force majeure clause suspends and/or terminals the contract on “the occurrence of an extraordinary event beyond the parties’ reasonable control, which materially affects the parties’ ability to perform their contractual obligations”.
On the other hand, when a vessel is delayed by a quarantine or is forced to deviate due to an infected crew member, under time charter parties it may be placed off-hire – subject to the wording of the charter.
Common wordings of charter parties have been held to place the vessel off-hire due to legal or administrative restraints if they related to the efficiency or condition of the vessel or crew.
In spite of this, the vessel may also remain on hire but the outcome in each case will depend on the facts and wording of the charter party.
However, under voyage charters a deviation for the safety of the crew will be at the ship owner’s expense as no additional freight may be payable unless “a reasonable deviation” defence, under the Hague or Hague-Visby, rules is successfully raised.
Major unpredictable events such as a norovirus can also have effects such as lower utilisation rates for shipping lines and higher costs on routes due to quarantine situations.
According to a Container Availability Index, published by online platform Container xChange, containers are piling up at the Port of Shanghai with relatively high values for 40 HCs (0.58), 40DCs (0.46) and 20 DCS (0.62), with numbers over 0.5 indicating a surplus of equipment.
However, the container availability forecast shows similar values for 40 HCs (0.55), 40 DCs (0.17) and 20 DCS (0.55) in Qingdao, which indicates a small deficit of containers.
The online platform has speculated that these results show that companies are still trying to get cargo out of China from a port further away from Wuhan.
Container xChange’s Container Availability Index takes millions of data points from transactions on xChange as well as globally available tracking data into account to forecast availability of equipment for most of the biggest port locations.