Concerns are rising over the coronavirus outbreak in China and the potential disruption to global supply chains.

The number of reported cases in China surged 60% overnight to more than 4,500, with the death toll rising to 106 people.

Yesterday, Beijing announced that the lunar new year holiday would be extended by three days, until 2 February, in an effort to contain the virus, following its outbreak in Wuhan, capital of the central Hubei province and a major manufacturing and transport hub.

However, there are reports some local governments, including Shanghai, have extended the holiday until 9 February for all but essential companies.

The extended holiday and accompanying travel ban in Wuhan and other affected cities will prevent factories reopening, according to the Nikkei Asian Review. This will include the major Foxconn facility in Shanxi Province and auto manufacturers in Wuhan, such as Honda.

Wuhan is home to some 500 factories and the city’s 11 million population is under lockdown. All passenger and cargo flights out of the city have reportedly been cancelled, with only inbound flights of medical supplies permitted, while operations are suspended at Wuhan’s Yangtze river port, which handled close to 1.5m teu last year.

On Friday, the Maritime and Port Authority of Singapore (MPA) implemented temperature screening at all sea checkpoints, including ferry and cruise terminals, PSA’s container terminals and Jurong Port.

The International Transport Workers’ Federation (ITF) has issued safety guidelines to seafarers to protect themselves from the virus, which include wearing facemasks and avoiding contact with live animals.

Six crew on board the CMA CGM Ural have been reported ill with pneumonia-like conditions, according to Maritime Bulletin, although it is not yet known whether they are infected with coronavirus. The ship is reportedly en-route to Suez from China.

Law firm Hill Dickinson warned the shipping industry should be prepared for similar issues that arose in previous severe disease outbreaks, adding: “The risks involve infection of crew members, quarantine measures, closure of ports and, depending on the circumstance, may affect charter party obligations.”

One source told The Loadstar the crisis and extended national holiday in China could prolong the slack season for container lines.

In Hong Kong, where there are eight reported cases of coronavirus, Cathay Pacific Cargo issued a statement today that operations remained normal at Hong Kong International Airport and that its freighter schedule was unaffected.

Meanwhile, Michael Osterholm, director of the centre for infectious disease research at the University of Minnesota, issued a stark warning of potential disruption to global supply chains, particularly pharmaceutical products.

“Many of the critical products we use every day, such as medicines and medical devices, are actually manufactured in China’s areas being shut down,” he said on CNBC. “These are just-in-time delivery systems, and we already have shortages in this country from Chinese-made drugs.

“There are many diverse industries in the area near Wuhan. Every company that has any manufacturing capacity in China right now better be looking very carefully at their supply chains.

“I think this is something not yet appreciated. I can say with certainty it’s going to have an impact on the supply of very critical products around the world within days to weeks.”

As I am sure we all agree we do not know what is going to happen on 31st October 2019… will we leave? will we remain? Deal or no Deal? but we do have to prepare as best possible no matter what happens!

The below may give you some guidance of what you need to do….

Are you importing from Europe?

If we DO leave, and it’s without a single market deal on the 31st October then you must do the following to prepare.

  • Ensure you have an EORI number. If you haven’t, apply for one here.
  • Then, register for TSP. (Transitional Simplified Procedure). If you haven’t done so already, this will allow you to continue importing goods from Europe without being held up at borders/ports. Apply Here.

That’s it for now.

Why TSP? TSP is going to be the only realistic way to import from Europe because no trucker/haulage firm is going to want their trucks held up at port waiting for your goods to clear customs.

How does it work? You as the importer can declare the TSP declaration yourself but, it has to be done correctly and would require a customs trained staff member to the same level as operating your own customs clearances. Therefore we guess it would be more efficient for Freight Forwarders/Customs agents to perform this task as usual.

After leaving, or during transit, a TSP declaration can be submitted. The truck/lorry will cross the border as usual just like it does today. It will deliver, to you just like it does today. There will be no checks or additional stops that we have been made aware of.

Before the 4th of the following month, a FULL customs clearance must be processed to complete the process. We would do this for you too. Costs for the TSP submission and an EU clearance have not yet been made clear but we will, of course, update you.

At this point, on the 4th of the month, you will need to pay any Import Duty that’s payable. However, VAT will not. This will be payable by you directly to HMRC within your normal business VAT return. If the products you import are Duty-Free, then you’ll have nothing to pay – just a paper exercise for declaring your import VAT and Sales VAT as usual.

Not Importing from Europe but Non EU Countries?

In a no-deal Brexit, you will benefit from the cash flow exercise as mentioned above, from having all your import VAT switched from immediate payment to your business VAT return. Only Duty will be payable upfront during arrival.

If you’d like to know more about TSP Procedures Click Here

If you’d like to know more about the Irish Border Click Here

China Cosco Shipping 14,300 teu containership, CSCL Jupiter, has been damaged after a collision with another vessel in Vietnam, according to local media which quoted the company.

There were no reports of injuries to the crew, cargo damage nor pollution at the scene.

The incident occurred in the evening hours of 22 August when the 366 metre-long, Hong Kong-registered vessel was preparing to sail out of Cai Mep International Terminal, near Ho Chi Minh City.

Details have yet to emerge on how the collision happened.

CSCL Jupiter’s sailing schedule is expected to be delayed by about a week as the vessel is reported to have suffered damage to its hull and will undergo repairs at Cai Mep.

The containership’s next destination is thought to be Port Klang in Malaysia.

The CSCL Jupiter had already been involved in an incident in August 2017 when it ran aground on the approach to the port of Antwerp, blocking access to the port.

Taiwanese carrier plans to order five to six 23,000 teu vessels and charter in another four to five units of the same size. Shipbuilding sources say the company is still in talks with yards to firm up the contracts

EVERGREEN Marine has announced an $1.8bn plan to expand its fleet with up to 11 new supersized containerships.

The Taipei-listed carrier said in exchange filings that it was seeking five to six 23,000 teu newbuildings via direct ordering at yards for a maximum of $960m and another four to five units of the same type through chartering for $800m in total.

These are the largest boxships in the market and typically can only be deployed on the Asia-Europe trade lanes.

Evergreen said the fleet renewal scheme had gained board approval although the shipbuilding and chartering contracts had yet to be signed.

One senior executive from a major shipyard under the wings of China State Shipbuilding Corp said the Taiwanese shipping line was still in talks with the builders.

Japanese builder Imabari and its shipowning arm Shoei Kisen Kaisha, where Evergreen previously ordered 11 20,000 teu ships, were said to be among the contenders, while China’s Jiangnan Shipyard was also said to be competitive in the bidding.

“The Japanese have the advantage of cheap financing and faster delivery,” the Chinese yard executive said, adding “but we are more competitive in building prices and more flexible in customised designs”.

Lloyd’s List earlier reported that some Chinese leasing houses had expressed an interest in funding the newbuildings.

Evergreen said the newbuilding programme would be used to increase its fleet capacity and meet future market demand, while at the same time replace old tonnage and improve efficiency.

The company, ranking seventh on Alphaliner’s Top 100 liner shipping carrier league table, currently has an orderbook of 61 ships or 361,467 teu, accounting for 27.9% of its existing fleet capacity. The latest orders, if fully placed, will raise that ratio to 47.4%.

Jason Chiang, director of Ocean Shipping Consultants, earlier said Evergreen had the opportunity now to tap a softer shipbuilding market and get better ship prices compared with those previously offered to its larger rivals.

“Mid-sized container shipping lines face the risk of having to fold if they do not invest in new, larger boxships that can compete in the market.”

The first of MSC’s latest series of ships has arrived in northern Europe from Asia. Despite its standard dimensions, its additional row of container stacks gives it a record-breaking capacity

MEDITERRANEAN Shipping Co’s 23,756 teu MSC Gülsün, currently the world’s largest containership, has completed its maiden voyage to Europe.

Vessel tracker data from Lloyd’s List Intelligence shows that MSC Gülsün was due to arrive in Bremerhaven after calling at Algeciras in Spain last week, following a voyage via the Suez Canal from Yantian in China.

MSC Gülsün is the first of an 11-ship series of vessels that MSC ordered in 2017. Sistership MSC Mina has also entered service and was last reported en route to Tanjun Pelepas in Malaysia.

At 400 m loa, MSC Gülsün is roughly the same dimensions as the recent deliveries of ultra-large containerships, but has the distinction of having 24 rows of containers across its 60 m beam, rather than the usual 23, allowing for the higher nominal capacity.

MSC is promoting the new ships as highly energy efficient, saying they will help reduce the amount of CO2 emitted per container carried.

As well as being fitted with a hybrid scrubber system, the vessel can also run on low-sulphur fuel and could also later be adapted for LNG, MSC said.

MSC Gülsün’s improved energy efficiency and fuel economy ensure that MSC is on track to meet international 2030 environmental policy targets set by the International Maritime Organization  ahead of time, building on a 13% improvement in CO2 emissions per ton of cargo moved already achieved across the MSC fleet between 2015 and 2018,” the carrier said in a statement.

MSC Gülsün and MSC Mina are serving on the 2M Asia-Europe AE-10 / Silk  service. The loop links China and South Korea with northern Europe, including the Baltic Sea port of Gdansk, via wayport calls at Tanjung Pepelas and Algeciras.

HMM appears to be going into its partnership with THE Alliance early, announcing that it will be dumping its beleaguered Asia-North Europe service later this month.

It will be terminating its AEX rotation and, instead, making use of capacity from THE Alliance on the Asia-Europe tradelane eight months before its planned entry into the alliance in April 2020.

One source told The Loadstar HMM had, in part, launched the AEX service in an attempt to “protect its identity”, but noted that it had come at a price.

“Its latest results show it was still losing money and by chopping the AEX, which is very expensive partly due to the small vessel size, it will make some savings,” said the source.

“Even so, it will still be required to maintain payments for its contracted service on the 2M, where it is required to pay for slots used or unused.”

The source added that it would be “interesting” to see how much traffic the carrier diverted to THE Alliance vessels.

HMM confirmed that the 2M+H strategic cooperation would be maintained, which it said would see all current services remaining fully operational.

“First and foremost, HMM would like to express its highest gratitude for your unwavering support and encouragement,” it said. “As part of our continuous efforts to broaden network coverage and improve service efficiency… we are pleased to announce the use of services in THE Alliance.”

The final AEX sailing will depart South Korea on Sunday, on a Busan-Shanghai-Ningbo-Yantian-Singapore-Rotterdam-Hamburg-Southampton rotation.

First-quarter results showed the carrier continuing to haemorrhage money, recording an $88m loss, despite a bump in revenues and volumes of 11% for the three months.

It said: “We will maximise efforts to strengthen profitability by successfully securing service contracts, rationalise service network, attract high-value cargo and create competitive new service routes.

“Given rising demand during peak season, both freight rate and container volumes are highly likely to increase in the second and third quarters.”

HMM launched the AEX independently of its slot charter arrangement with the 2M in April last year, but had reliability issues leading to a temporary suspension of the UK call.

The original motivation for the standalone loop came from its Korean electronics customers which complained they were unable to guarantee shipment on nominated 2M vessels. Indeed, one HMM source complained to The Loadstar that it was “always the last to know” about service disruptions on 2M vessels.

The board at Evergreen Marine, Taiwan’s largest shipping line, has approved plans to bring in its largest ships, orders that could see the Chang family-controlled line leapfrog Ocean Network Express (ONE) and Hapag-Lloyd into fifth spot in the global liner rankings.

Evergreen said it is looking to add eleven 23,000 teu ships, five or six of which it will order and the remainder will be chartered in. The company has set aside $1.76bn for this significant fleet addition.

The new ships will add to Evergreen’s existing 1.3m teu fleet. No yards have yet been mentioned although tradition would suggest Japan’s Imabari is in poll for a good portion of the new tonnage.

As far as Evergreen’s existing owned tonnage goes, its largest ships are in the 12,000 teu range, but it also has a slew of much larger ships in the 20,000 teu bracket that have delivered in the last couple of years.

In view of market seasonality changes in order to  control capacity and increase demand to counteract possible rate reductions on Far East Europe Trade, The Ocean Alliance have announced the below Blank Voyage plan:

void sailing table

If you have any queries or require any assistance please do not hesitate to contact your FGL representative

 

South Korean carrier Hyundai Merchant Marine (HMM) is to join THE Alliance when its slot charter agreement with the 2M expires next April.

HMM will become the fourth member of  the vessel-sharing group, joining Hapag-Lloyd, ONE and Yang Ming.

An agreement signed last week also saw the founding members extend the duration of their alliance until 2030.

Hapag-Lloyd chief executive Rolf Habben Jansen said: “HMM is a great fit for THE Alliance as it will provide a number of new and modern vessels, which will help us to deliver better quality and be more efficient.”

Mr Habben Jansen has clearly warmed to the fresh overtures of HMM, previously he said: “We think it is very important that we have a level playing field and we are not in favour of government subsidies in the form that it is being done with HMM.”

THE Alliance has conceded a lot of ground to the bigger 2M and Ocean alliances over the past year, hobbled by the weak financial position of Yang Ming and the botched merger and launch of the Japanese carriers K Line, MOL and NYK as ONE.

HMM has a $2.6bn orderbook for 12 scrubber-fitted 23,000 teu vessels, which will be delivered in the second quarter of next year, and eight 15,000 teu ships stemmed for delivery a year later.

Meanwhile, Hapag-Lloyd, the only profitable carrier of the group, was recently rumoured to be talking to Asian yards about ordering 20,000+ teu ULCVs.

The news of HMM’s acceptance into THE Alliance follows HMM new president and chief executive Jae-hoon Bae’s ‘charm offensive’ visit to Europe in April for meetings with the 2M partners, Maersk Line and MSC about the carrier becoming a full member of their alliance.

The Loadstar understands from a source that, when his approach was flatly rejected, Mr Bae returned to THE Alliance members, which had rejected the advances of his predecessor, to see if there were conditions that would persuade them to change their minds.

These mainly related to obtaining assurances from the state-owned Korea Development Bank (KDB) that it would continue to fund the carrier after losses of $720m last year and $1.1bn in 2017.

Shippers have become more cautious with their bookings after the bankruptcy of  carrier compatriot Hanjin Shipping in 2016, which resulted in over 100 ships and more than 500,000 teu of cargo stranded at sea and in ports for several weeks.

It prompted THE Alliance to build a funding mechanism into its new vessel-sharing agreement that allows the remaining parties to take action to facilitate the movement of cargo carried by a failed container line partner.

Ocean Network Express (ONE) chief executive Jeremy Nixon said he was “happy to see HMM join THE Alliance”. He claimed this would improve sailing frequencies and provide “a better balance of our cargo flows”, while Yang Ming’s chairman and chief executive, Bronson Hsieh, said it was “an important milestone for THE Alliance”.

Lars Jenson, chief executive and partner at SeaIntelligence Consulting, said HMM’s injection of large ULCVs would strengthen THE Alliance’s growth opportunities, without member carriers needing to “leverage themselves into a large new orderbook”.

According to Alphaliner data, HMM is currently the ninth-ranked global carrier, with an operating fleet of 425,550 teu and an orderbook of 396,000 teu.

Mr Bae said: “Being a full member of THE Alliance gives us a lot of pride. We are convinced that we will be successful and generate additional value for our customers, employees and shareholders with combined experience, strategic skills, competitive fleet and a strong focus on our clients’ needs.”

In October, HMM set a target to expand its fleet capacity to 1m teu and be generating annual revenue of $10bn by 2022.

A slot charter agreement with the 2M was a condition of HMM’s financial restructuring in 2016, but the South Korean carrier was always the ‘poor relation’ in the group and, according to insider sources, “the last to be told” when containers were rolled over.

Companies trying to prepare for a ‘no-deal’ Brexit by stock-piling supplies will face another headache this time around – warehouses already fully booked for the Christmas rush, The Sunday Times reported yesterday.

The prospect of the UK leaving the EU without a withdrawal agreement has become a real possibility again, with several of the candidates to succeed Teresa May as Conservative leader and UK prime minister, including frontrunner Boris Johnson, pledging to take the country out of the bloc by the end of October with or without a deal.

Ahead of the first Brexit target date of March 29, many firms stockpiled a broad range of goods in anticipation of chaos and gridlock at Channel ports due to the re-introduction of border controls.

But Shane Brennan, chief executive of the Food Storage and Distribution Federation, told The Sunday Times: “We have built our warehousing infrastructure in this country around being able to cope with Christmas. It’s booked up already. Unless (companies) know for certain no deal is going to happen within five or six months’ notice, they will have to carry on as normal and deal with problems as they arise.”

His comments echo those expressed by Tesco boss Dave Lewis last week, who said: “To do (in October) what we did in March (this year) will be more difficult because we won’t have the space in our logistics system to be able to cope because we’ll be preparing for Christmas.”

Carmaker BMW, which had brought forward the annual shutdown of its Mini plant near Oxford to April to offset any potential disruption around the original Brexit deadline, said it had no plans for a repeat, while Jaguar Land Rover said “no decision has been made” about the autumn, the report noted.

Commenting on the prospect of company chiefs having to gear up for a no-deal Brexit again, Adam Marshall, director-general of the British Chambers of Commerce, told the newspaper: “Businesses are incredibly frustrated.”