Coronavirus Disruption Fuels Surcharges, Rate Hikes for Indian Shippers

Indian freight forwarders have begun warning customers of impending ocean carrier surcharges and other extra cost elements as a result of coronavirus disease 2019 (COVID-19)-related disruption wreaking havoc on global container supply chains in recent weeks.

Mumbai-based forwarder Teamglobal Logistics, in an advisory, said with vessel sailings across strings connecting China being increasingly canceled and equipment shortage issues rising, the disruptive implications can easily linger for months.

The company said while it is working in collaboration with various global partners to minimize the overall impact, the challenges remain daunting. “We have secured additional equipment where possible, and developed alternative routes, in an effort to continue our weekly LCL (less-than-containerload) export service offerings globally with as little disruption as possible,” it said.

“Such alternatives in routing, along with other unknown factors that may come into play, may result in increased costs and/or surcharges having to be imposed,” the forwarder added. “Congestion charges imposed by carriers, obtaining equipment and space in an imbalanced location, repositioning cargo through alternate gateways, etc. can result in additional fees being imposed to our clients.”

Teamglobal noted inland points in the United States are already seeing considerable equipment shortages, while expecting similar problems to surface at main ports and feeder points across Europe in the coming days.

The company also said there has been a strain on air freight capacity due to missed flight connections to and from China. “It may mean finding alternatives to our traditional routings, such as further developed several sea/air and air/sea gateways in Asia to help circumvent the capacity issues on airfreight,” it said.

Government seeks relief for shippers

In response to trade appeals, the Indian government recently put out a directive to all customs locations to be more lenient while handling shipper documentation filings for Chinese import shipments.

The Brihanmumbai Custom Brokers Association (BCBA) has been at the forefront of those outreach efforts. The group has also initiated interactions with shipping lines directly and through their local frontline offices for securing concessions on demurrage charges for containers stranded at port-side yards and elsewhere.

“The trade is experiencing issues with original documents (bills of lading) not being received in time, thus causing delay in obtaining delivery orders from the shipping lines as well as detention charges being incurred,” the broker group said in a letter to the Maritime Association of Nationwide Shipping Agencies India (MANSA). MANSA represents ship agents for carriers, mostly operating out of the ports of Mumbai and Jawaharlal Nehru Port Trust (JNPT).

Similar trade concerns were shared by other Mumbai-based forwarders when contacted by JOC.com.  Efforts to reach some of the major carriers, including Maersk and CMA CGM, were unsuccessful.

However, a Northern India-based industry representative on Thursday told JOC.com containerized trade out of the hinterland region has not been “severely” impacted thus far.  “If the disruption lasts longer, there will be serious complications, with shippers missing order commitments and equipment inventories drying up,” the source said.

“The ongoing crisis could have an inevitable knock-on effect on freight rates,” an industry observer told JOC.com.

Some signs on that front are already becoming apparent.  For example, two leading carriers – CMA CGM and Mediterranean Shipping Company – this week announced fresh general rate increases on major trades out of India.  Starting March 1, CMA CGM will seek a GRI of $1,250 per TEU and $1,500 per FEU for cargo moving to Northern Europe and the Mediterranean. MSC’s planned increase of $200 and $300, respectively, on shipments to ports in Canada, Mexico, Central America, and the Caribbean will take effect March 2.

“In order to maintain the high level of reliability and efficiency of our services to meet the needs of our customers, MSC has decided to implement a general rate increase,” the Geneva-based carrier said.

Source: JOC

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