Impact Of Covid-19 On Shipping And Logistics
Maritime Gateway|May 2020
Industry stalwarts discuss threadbare the prevailing logistics and supply chain scenario and issues in clearing cargo during the COVID-19 lockdown

The debut webinar by Maritime Gateway brought together industry leaders representing ports, CFS, shipping lines and the shippers to discuss the state-of-affairs across the supply chain during the lockdown. Setting tone for the hour long discussion which was followed by a quick Q&A session, Ramprasad, Editor-in-Chief and Publisher, Maritime Gateway shared an eagle’s eye-view of the current scenario in movement of cargo and operations of service providers at sea and shore.

The logistics chains are going through unusual and massive losses from the disruption caused by the COVID-19 pandemic. The disruption is both from supply and demand side. Terminals, CFSs, ICDs and warehouses are feeling the heat. The shutdown of factories and scarcity of manpower to de-stuff cargo as well as drivers to operate trucks for cargo evacuation has derailed the trade and smooth functioning of the logistics industry. The estimate is a cumulative loss of $9 trillion to the global GDP and the world trade has already witnessed a decline by 32 per cent. India’s exports plunged by 35 per cent and imports by 29 per cent. The ports witnessed a 50-60 per cent fall in traffic, operating at 30-40 per cent capacity. There is a 5.25 per cent decline in cargo volume in March vs March of 2019. In case of containers the downfall is about 12.51 per cent. The turnaround time at ports is around 12.2 days, which was about 3 days in pre-COVID-19 scenario.

An estimated 1.5 million truck drivers have gone to their native places and there are a lot of restrictions on inter-state and intra-state movement. This also caused a spike in freight rates ranging from 15 per cent to nearly 80 per cent. A similar situation we are witnessing at neighbouring ports of Sri Lanka and Bangladesh with huge container pileup happening. Currently it is estimated that 80,000 containers are stuck at CFS in and around JNPT and about 50,000 containers at Chennai Port and we are hearing similar situations at other private terminals.

With this background, Ramprasad placed the first question before the panellists:

Q. In the second phase of lockdown what is the ground reality? What are the container evacuation strategies?

Capt. Deepak Tewari, Chairman, CSLA: We are not in a good position. As far as shipping lines are concerned, globally volumes have gone down by more than 15 per cent and they are likely to go down during the course of the year to 28 per cent reduction Y-o-Y, as compared to last year. And this goes well above than 10 million to 15 million teus. Shipping lines have had to resort to blank sailings and this number since the COVID-19 hit us is 435 blank sailings globally. In India alone 43 blank sailings have taken place between March 22 and April 22. This indicates the lack of export cargo and not only the shipping lines will feel it, but the ports, supply chain and ultimately the exporters/importers will feel it.

Today we are facing congestion at the ports, CFSs and if the importers don’t trigger the supply chain for clearing the imports from the ports we will witness a pretty shocking situation. There may come a situation where ports are totally congested and ships are not allowed to berth. A private port in India has already given a notice effective April 18 that they are not going to gate-in any further export containers.

Q. What is the situation at private ports regarding container movement?

Capt. Sandeep Mehta, President – Business Development, APSEZ: Being an essential service all our 10 ports are functioning but the need to maintain social distancing has put certain limitations on the performance of the ports. Lack of clearances of imports at our ports has caused one of them to put restrictions. The larger issue is that when the truck drivers vanished and about 40,000 trucks were stranded at various places and there was again a mismatch between the government instructions and the execution by state machinery, resulting in interstate restrictions, but they were gradually resolved. Railways came to a great support and as the tracks were totally free of passenger traffic, the railways were able to move the cargo from gateway ports to the hinterlands, taking away some of the load from the ports.

The local CFSs at the ports have done their bit and have taken as much cargo as they could. As the government issued a number of directions/advisories due to which there emerged a false sense of casualness in the people to delay taking deliveries, which has caused a log-jam at the ports. People may now wait till May 2nd to clear their cargo, but the capacity at the ports, CFSs/ICDs is limited and unless the imports are moved out there is no port in the world which can accept indefinite deliveries. We have been lucky at Mundra and Kattupalli as we have large space available there.

The Customs, shipping lines and CFS have come forward, now it’s the turn of importers to take their cargo deliveries. CHAs have a larger role to play in this.

Q. What is the situation at CFSs?

Adarsh Hegde, Joint Managing Director, Allcargo Logistics Ltd: We have been through what Capt Sandeep Mehta has summarised, but the ports and CFS were back in action maximum in 72 hours calling back our operators, drivers, providing them all the incentives and stuff required to make sure the evacuation of imports starts. As we were in this process we had pressure from the government and there was some misinformation making the rounds continuously due to which people never came forward to pick their containers, enjoying the free days they were given. The forwarders and the CHAs should have come forward as well, they are a part of the essential service act, but they are not contributing to evacuation of cargo. Even after 3 to 4 weeks passing by the importers again complain they are not getting free time at the CFSs.

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