Due to the extended CNY holidays, yard density has reached critical levels. With the labour shortage in the current logistic chain, Reefer containers are being collected slower than usual. Consequently, this has resulted in severe congestion and an ongoing shortage of Reefer plugs at the terminals of main ports such as Shanghai, Tianjin Xingang and Ningbo.

In order to facilitate cargo movement and to keep cargoes at optimum conditions –carriers have put in place following

arrangements:

    ● For Reefer cargoes already in transit, carriers may perform a Change of Destination to discharge the containers at alternative ports for transshipment without prior notice.

     ● Reefer containers awaiting pick-up may be temporarily stored and plugged-in on board a vessel docked alongside.

We expect a transit delay for containers at these transshipment ports until the next vessel voyage is available. Due to the amount of refrigerated cargoes arriving into China from all regions, some of the alternative ports are also beginning to face capacity constraints. Current situation is expected to last two to three weeks at this point, subject to development of the viral outbreak and the operational capacity of each port.

For any upcoming bookings, carriers may require an LOI before accepting bookings going into China destinations.

Ocean carriers are taking measures by announcing a Congestion Surcharge or Cost Recovery surcharges with immediate effect in order to cope with the current situation. At this time, it is uncertain when local Chinese supply chain will return to regular operations. Hence, the surcharge will be applicable until further notice.

Carriers reacted to the situation with additional void sailings on top of the CNY blank sailings. Coupled with the expected cargo rush once factories resume operations, shipping capacity will be at a severe shortage. This rapid mass cancellation of sailings from China will cause capacity shortage to back haul shippers in the next 3-6 weeks depending on geography. As a result, freight rates are also expected to spike in response to the space shortages on both head haul and back haul voyages.