Shipping faces disruption due to COVID-19

Transport restrictions put in place to curb the spread of the COVID-19 virus had caused serious disruption to the flow of trade, according to a report by the Malaysian Palm Oil Council (MPOC).

The vegetable oils and fats sector was one of the industries most affected as it was heavily reliant on shipping for its logistics needs and flow of goods.

Problems faced by ship owners, port authorities and governments included crewing and commercial issues and the issue of not calling at specific ports affected by the virus.

In China, protection and control measures implemented by port authorities included a health declaration before berthing.

In India, a note issued by the Port Health Organisation (PHO) on 9 March said that cargo vessels coming from China, Hong Kong, Indonesia, Iran, Italy, Japan, Malaysia, Nepal, Singapore, South Korea, Thailand and Vietnam would be screened and declared ‘suspect’ or ‘healthy’.

Other countries had also introduced similar regulatory control requirements on the arrival of ships.

World Grain wrote on 1 April that the physical movement of grains and soyabeans between buyers and sellers had continued relatively smoothly in terms of logistics and shipping because the transport of commodities had, so far, been excluded from COVID-19 related restrictions by the governments of major exporters.

Dry bulk shipping freight rates fell initially as China quarantined large parts of the country in February but rates for vessels used in grain transport (those below Capesize) recovered once China got back on its feet. Exports from the Black Sea and Brazil also helped prop up freight rates for smaller bulk carriers through the first three months of 2020.

“As we enter the Latin American grain export season, long-haul soyabean shipments from Brazil to China will drive an uptick in Panamax bulker demand,” World Grain quoted shipping analyst MSI as saying.

Soyabean deliveries to ports and crushers in Argentina and Brazil were disrupted as local authorities blocked movements in some areas although the issue seemed to have been largely resolved towards the end of March.

UkrAgroConsult freight market analyst Maksym Kharchenko said new layers of bureaucracy and additional safety and quarantine procedures would impede grain logistics in the coming months.

“Delivery periods tend to be increasing due to quarantine measures at ports. Many countries have introduced additional screening and mandatory 14-day quarantine rules for vessels coming from certain countries. This may increase the cost of shipment in some cases because of more time charter-chargeable days.”

MSI said the cost of shipping over the next six months would be determined by whether commodity producers in key exporting countries such as Australia, Brazil and Indonesia continued to largely escape the worst ravages of COVID-19.