SINGAPORE, June 16 (Reuters) – Global port congestion is set to continue until at least early 2023 and keep spot freight rates elevated, logistics executives said on Wednesday, urging charterers to switch to long-term contracts to manage shipping costs.

The COVID-19 outbreak has lengthened ship delivery times since 2020, pushing up freight costs, while the Russia-Ukraine conflict and lockdowns in Shanghai have added to supply chain disruptions this year.

“We believe the current congestions, not only the ports but also the landside infrastructure, will be there at least till Q1 2023,” said Peter Sundara, head of global ocean freight product for the global logistics division at Visy Industries.

While more vessels could be added to the global fleet next year, this does not mean that freight rates will drop broadly as it depends on how ship carriers allocate increased vessel capacities, he told the S&P Global Platts Bunker and Shipping Summit.

Eric Jin, head of investment support at industrial equipment supplier BMT Asia Pacific, said rising shipping costs, longer transit times and higher uncertainty will be the “new normal” for the shipping industry.

Spot chartering rates have held firm so far this year, with supply chain disruptions and port congestion affecting ships globally, particularly in the United States and China.

The executives recommended charterers sign longer-term contracts with shipowners to overcome issues of volatile cost and availability.

It’s “no longer a case of going for three months or six months, one month, not even one year, but two to three years … because we want certainty in cost and certainty in space,” said Sundara.

BMT’s Jin said more than 60% or 65% of shippers were remaining on spot rates.

“This means they are not taking measures to deal with the new situation, this means they are prone to full supply chain risks,” he added.

In its annual report for 2021, CHIRP Maritime included a single known case of a master who deceived port officials and denied the presence of COVID symptoms aboard his ship. “While this is the first such report to be received by CHIRP Maritime, it is unlikely to be an isolated case but rather the tip of an under-reported industry-wide problem,” the organization reported. 

Case study outline: A conscious decision not to declare notifiable disease symptoms on board when entering port put the pilot, dockworkers, and the wider community at risk.

What the reporting crewmember told CHIRP:

Following a full crew change in port, the vessel sailed that evening and went to anchor outside the port. Soon after joining, two of the crew exhibited COVID symptoms – one of them later learned he was a ‘close contact’ with a confirmed COVID sufferer – both seafarers were isolated on board.

Initially, the master kept the presence of symptomatic crew quiet, choosing not to inform the vessel’s management company. Additionally the master falsified the seafarers’ temperature records by asking them to stand outside in the cold before recording their temperature. When the master was persuaded to inform the company (as per the COVID management plan), the company instructed the master not to disclose the issue. The vessel remained at anchor.

The symptomatic seafarers were employed through a manning agency, which applied pressure to the management company to conduct COVID tests. Three days after COVID symptoms were first exhibited, the management company instructed the vessel to proceed into port. The two symptomatic seafarers would be replaced on board and then accommodated and tested ashore.

During the phone call with the company, the captain volunteered to lie to the harbor authorities about having COVID symptoms onboard. (The port asks all arriving vessels “if they have reportable symptoms on board.”) The company accepted the captain’s offer.

Subsequently, the vessel entered port without informing any authority of the reportable symptoms on board. The pilot who boarded the vessel was not informed of the symptomatic crew and neither was the taxi driver whodrove the two seafarers to their accommodation ashore.

The day after the symptomatic seafarers were taken ashore, two replacement crew joined the vessel. Only one of them had been informed of the suspected coronavirus on board the vessel before they joined. The vessel departed the harbor after embarking the two crew replacements and taking on food stores. The vessel did not take a pilot for sailing.

Five days after the symptomatic seafarers were landed ashore (and 8 days after their symptoms first appeared), the two seafarers were finally tested by a private company. The test results were positive for coronavirus. Sometime later, the two previously symptomatic seafarers were re-tested – the results came back negative for coronavirus. The company offered them employment on another vessel, but they declined and their contracts were terminated. Their manning agency paid for alternative accommodation and flights back to their home country.

After departing the harbor, no further symptoms presented on board.

The reporter had contacted the DPA, but only after the two crew members were landed ashore, which the reporter recognized was too late. Earlier action might have led to a better outcome with proper procedures followed and safety precautions in place for the pilot and the taxi driver. However, the conversation between the master and the company had been with the company directors, by-passing the DPA. It is unclear if the DPA would have had any influence given the direct relationship between the master and company directors.

In response to questions, the reporter noted the following: there are many human element failures within this report including the reporter’s own. Whatever the captain’s misguided reasoning for offering to lie to the authorities, the company should have declined and instructed him to make a full and honest declaration to the port authorities.

Finally, the reporter thought that there must be other vessels in similar situations waiting outside ports in various parts of the world.

CHIRP comment

The CHIRP Maritime Advisory Board (MAB) noted the following points.

• This report identifies an absolute violation of the WHO International Health Regulations (2005) concerning the requirements to report the presence or suspected presence on board of a notifiable disease. Beyond the regulations are questions of moral and ethical integrity.

• Long established by the WHO, IMO, and ILO is an obligation on the master of a ship to make an accurate declaration when entering port.

• Early in the coronavirus pandemic, a broad coalition within the maritime industry came together to produce a framework of protocols to facilitate safe crew changes and repatriation. On 5th May 2020, IMO issued a Circular Letter (No.4204-Add.14), informing shipping companies of the recommended framework of protocols.

• This report concerns a recent incident which was a wilful breach of the regulations and those established protocols, not just by the master but by the management company as well. Given the potential harm to those individuals involved in repatriating the two seafarers with symptomatic Covid-19 conditions, pilot, crew, agents and taxi driver, this case highlights the imperative to properly report any notifiable disease.

• COVID restrictions and quarantine have both direct and indirect consequences on seafarers and additionally on a ship’s ability to continue to work cargo. All such issues can be compounded by restrictive charters and inflexible charter parties.

• The reporter also highlighted that the master engaged directly with the company’s directors and by-passed the Designated Person Ashore (DPA) (The DPA is the authorised direct link between the ship and the highest level of management of the Company who is responsible for ensuring the safe operation of the ship.)

While this is the first such report to be received by CHIRP Maritime, it is unlikely to be an isolated case but rather the tip of an under-reported industry-wide problem, made possible by lack of enforcement.

As far as CHIRP Maritime is aware, the company has not carried out an internal investigation so there are no lessons learned from this incident. However, CHIRP Maritime feels it is incumbent on all shipping companies and masters to understand the reporting requirements for reportable diseases and to make accurate declarations. Notwithstanding any charterer’s contractual agreements, the master must ensure that the regulations are robustly adhered to and that reporting via the correct channels is followed.

The CHIRP (Confidential Human Factors Incident Reporting Programme) Charitable Trust has provided a totally independent and confidential safety reporting system to seafarers worldwide since 2013, complementing the reporting system it has offered to the UK aviation industry since 2003. By publishing our analysis of received incident and near-miss reports we raise awareness of safety issues and contribute to improved safety outcomes through all sectors of the maritime industry.

In its annual report for 2021, CHIRP Maritime included a single known case of a master who deceived port officials and denied the presence of COVID symptoms aboard his ship. “While this is the first such report to be received by CHIRP Maritime, it is unlikely to be an isolated case but rather the tip of an under-reported industry-wide problem,” the organization reported. 

Case study outline: A conscious decision not to declare notifiable disease symptoms on board when entering port put the pilot, dockworkers, and the wider community at risk.

What the reporting crewmember told CHIRP:

Following a full crew change in port, the vessel sailed that evening and went to anchor outside the port. Soon after joining, two of the crew exhibited COVID symptoms – one of them later learned he was a ‘close contact’ with a confirmed COVID sufferer – both seafarers were isolated on board.

Initially, the master kept the presence of symptomatic crew quiet, choosing not to inform the vessel’s management company. Additionally the master falsified the seafarers’ temperature records by asking them to stand outside in the cold before recording their temperature. When the master was persuaded to inform the company (as per the COVID management plan), the company instructed the master not to disclose the issue. The vessel remained at anchor.

The symptomatic seafarers were employed through a manning agency, which applied pressure to the management company to conduct COVID tests. Three days after COVID symptoms were first exhibited, the management company instructed the vessel to proceed into port. The two symptomatic seafarers would be replaced on board and then accommodated and tested ashore.

During the phone call with the company, the captain volunteered to lie to the harbor authorities about having COVID symptoms onboard. (The port asks all arriving vessels “if they have reportable symptoms on board.”) The company accepted the captain’s offer.

Subsequently, the vessel entered port without informing any authority of the reportable symptoms on board. The pilot who boarded the vessel was not informed of the symptomatic crew and neither was the taxi driver whodrove the two seafarers to their accommodation ashore.

The day after the symptomatic seafarers were taken ashore, two replacement crew joined the vessel. Only one of them had been informed of the suspected coronavirus on board the vessel before they joined. The vessel departed the harbor after embarking the two crew replacements and taking on food stores. The vessel did not take a pilot for sailing.

Five days after the symptomatic seafarers were landed ashore (and 8 days after their symptoms first appeared), the two seafarers were finally tested by a private company. The test results were positive for coronavirus. Sometime later, the two previously symptomatic seafarers were re-tested – the results came back negative for coronavirus. The company offered them employment on another vessel, but they declined and their contracts were terminated. Their manning agency paid for alternative accommodation and flights back to their home country.

After departing the harbor, no further symptoms presented on board.

The reporter had contacted the DPA, but only after the two crew members were landed ashore, which the reporter recognized was too late. Earlier action might have led to a better outcome with proper procedures followed and safety precautions in place for the pilot and the taxi driver. However, the conversation between the master and the company had been with the company directors, by-passing the DPA. It is unclear if the DPA would have had any influence given the direct relationship between the master and company directors.

In response to questions, the reporter noted the following: there are many human element failures within this report including the reporter’s own. Whatever the captain’s misguided reasoning for offering to lie to the authorities, the company should have declined and instructed him to make a full and honest declaration to the port authorities.

Finally, the reporter thought that there must be other vessels in similar situations waiting outside ports in various parts of the world.

CHIRP comment

The CHIRP Maritime Advisory Board (MAB) noted the following points.

• This report identifies an absolute violation of the WHO International Health Regulations (2005) concerning the requirements to report the presence or suspected presence on board of a notifiable disease. Beyond the regulations are questions of moral and ethical integrity.

• Long established by the WHO, IMO, and ILO is an obligation on the master of a ship to make an accurate declaration when entering port.

• Early in the coronavirus pandemic, a broad coalition within the maritime industry came together to produce a framework of protocols to facilitate safe crew changes and repatriation. On 5th May 2020, IMO issued a Circular Letter (No.4204-Add.14), informing shipping companies of the recommended framework of protocols.

• This report concerns a recent incident which was a wilful breach of the regulations and those established protocols, not just by the master but by the management company as well. Given the potential harm to those individuals involved in repatriating the two seafarers with symptomatic Covid-19 conditions, pilot, crew, agents and taxi driver, this case highlights the imperative to properly report any notifiable disease.

• COVID restrictions and quarantine have both direct and indirect consequences on seafarers and additionally on a ship’s ability to continue to work cargo. All such issues can be compounded by restrictive charters and inflexible charter parties.

• The reporter also highlighted that the master engaged directly with the company’s directors and by-passed the Designated Person Ashore (DPA) (The DPA is the authorised direct link between the ship and the highest level of management of the Company who is responsible for ensuring the safe operation of the ship.)

While this is the first such report to be received by CHIRP Maritime, it is unlikely to be an isolated case but rather the tip of an under-reported industry-wide problem, made possible by lack of enforcement.

As far as CHIRP Maritime is aware, the company has not carried out an internal investigation so there are no lessons learned from this incident. However, CHIRP Maritime feels it is incumbent on all shipping companies and masters to understand the reporting requirements for reportable diseases and to make accurate declarations. Notwithstanding any charterer’s contractual agreements, the master must ensure that the regulations are robustly adhered to and that reporting via the correct channels is followed.

The CHIRP (Confidential Human Factors Incident Reporting Programme) Charitable Trust has provided a totally independent and confidential safety reporting system to seafarers worldwide since 2013, complementing the reporting system it has offered to the UK aviation industry since 2003. By publishing our analysis of received incident and near-miss reports we raise awareness of safety issues and contribute to improved safety outcomes through all sectors of the maritime industry.

In its annual report for 2021, CHIRP Maritime included a single known case of a master who deceived port officials and denied the presence of COVID symptoms aboard his ship. “While this is the first such report to be received by CHIRP Maritime, it is unlikely to be an isolated case but rather the tip of an under-reported industry-wide problem,” the organization reported. 

Case study outline: A conscious decision not to declare notifiable disease symptoms on board when entering port put the pilot, dockworkers, and the wider community at risk.

What the reporting crewmember told CHIRP:

Following a full crew change in port, the vessel sailed that evening and went to anchor outside the port. Soon after joining, two of the crew exhibited COVID symptoms – one of them later learned he was a ‘close contact’ with a confirmed COVID sufferer – both seafarers were isolated on board.

Initially, the master kept the presence of symptomatic crew quiet, choosing not to inform the vessel’s management company. Additionally the master falsified the seafarers’ temperature records by asking them to stand outside in the cold before recording their temperature. When the master was persuaded to inform the company (as per the COVID management plan), the company instructed the master not to disclose the issue. The vessel remained at anchor.

The symptomatic seafarers were employed through a manning agency, which applied pressure to the management company to conduct COVID tests. Three days after COVID symptoms were first exhibited, the management company instructed the vessel to proceed into port. The two symptomatic seafarers would be replaced on board and then accommodated and tested ashore.

During the phone call with the company, the captain volunteered to lie to the harbor authorities about having COVID symptoms onboard. (The port asks all arriving vessels “if they have reportable symptoms on board.”) The company accepted the captain’s offer.

Subsequently, the vessel entered port without informing any authority of the reportable symptoms on board. The pilot who boarded the vessel was not informed of the symptomatic crew and neither was the taxi driver whodrove the two seafarers to their accommodation ashore.

The day after the symptomatic seafarers were taken ashore, two replacement crew joined the vessel. Only one of them had been informed of the suspected coronavirus on board the vessel before they joined. The vessel departed the harbor after embarking the two crew replacements and taking on food stores. The vessel did not take a pilot for sailing.

Five days after the symptomatic seafarers were landed ashore (and 8 days after their symptoms first appeared), the two seafarers were finally tested by a private company. The test results were positive for coronavirus. Sometime later, the two previously symptomatic seafarers were re-tested – the results came back negative for coronavirus. The company offered them employment on another vessel, but they declined and their contracts were terminated. Their manning agency paid for alternative accommodation and flights back to their home country.

After departing the harbor, no further symptoms presented on board.

The reporter had contacted the DPA, but only after the two crew members were landed ashore, which the reporter recognized was too late. Earlier action might have led to a better outcome with proper procedures followed and safety precautions in place for the pilot and the taxi driver. However, the conversation between the master and the company had been with the company directors, by-passing the DPA. It is unclear if the DPA would have had any influence given the direct relationship between the master and company directors.

In response to questions, the reporter noted the following: there are many human element failures within this report including the reporter’s own. Whatever the captain’s misguided reasoning for offering to lie to the authorities, the company should have declined and instructed him to make a full and honest declaration to the port authorities.

Finally, the reporter thought that there must be other vessels in similar situations waiting outside ports in various parts of the world.

CHIRP comment

The CHIRP Maritime Advisory Board (MAB) noted the following points.

• This report identifies an absolute violation of the WHO International Health Regulations (2005) concerning the requirements to report the presence or suspected presence on board of a notifiable disease. Beyond the regulations are questions of moral and ethical integrity.

• Long established by the WHO, IMO, and ILO is an obligation on the master of a ship to make an accurate declaration when entering port.

• Early in the coronavirus pandemic, a broad coalition within the maritime industry came together to produce a framework of protocols to facilitate safe crew changes and repatriation. On 5th May 2020, IMO issued a Circular Letter (No.4204-Add.14), informing shipping companies of the recommended framework of protocols.

• This report concerns a recent incident which was a wilful breach of the regulations and those established protocols, not just by the master but by the management company as well. Given the potential harm to those individuals involved in repatriating the two seafarers with symptomatic Covid-19 conditions, pilot, crew, agents and taxi driver, this case highlights the imperative to properly report any notifiable disease.

• COVID restrictions and quarantine have both direct and indirect consequences on seafarers and additionally on a ship’s ability to continue to work cargo. All such issues can be compounded by restrictive charters and inflexible charter parties.

• The reporter also highlighted that the master engaged directly with the company’s directors and by-passed the Designated Person Ashore (DPA) (The DPA is the authorised direct link between the ship and the highest level of management of the Company who is responsible for ensuring the safe operation of the ship.)

While this is the first such report to be received by CHIRP Maritime, it is unlikely to be an isolated case but rather the tip of an under-reported industry-wide problem, made possible by lack of enforcement.

As far as CHIRP Maritime is aware, the company has not carried out an internal investigation so there are no lessons learned from this incident. However, CHIRP Maritime feels it is incumbent on all shipping companies and masters to understand the reporting requirements for reportable diseases and to make accurate declarations. Notwithstanding any charterer’s contractual agreements, the master must ensure that the regulations are robustly adhered to and that reporting via the correct channels is followed.

The CHIRP (Confidential Human Factors Incident Reporting Programme) Charitable Trust has provided a totally independent and confidential safety reporting system to seafarers worldwide since 2013, complementing the reporting system it has offered to the UK aviation industry since 2003. By publishing our analysis of received incident and near-miss reports we raise awareness of safety issues and contribute to improved safety outcomes through all sectors of the maritime industry.

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UNCTAD’s report “Covid-19 and maritime transport: Navigating the crisis and lessons learned” describes how the COVID-19 pandemic shocked the global maritime transport system and some of the key effects on the sector. It highlights challenges arising from the disruption across ports and hinterland connections and examines response and mitigation measures implemented by various stakeholders and considers. It sets out the key lessons that can inform and guide preparedness and resilience-building efforts in transport and logistics.

The onset of the COVID pandemic in 2020 caused unprecedented disruption to maritime transport operations, impacting the smooth functioning of global supply chains.  Vessel calls were highly volatile but overall trended downward. In tandem, global maritime trade contracted by 3.8 per cent in 2020 before bouncing back by over 3 per cent in 2021.

Challenges faced by global supply chains include shortages of raw material, lead time issues, blank sailings, port closures, reduced working hours, equipment and labour shortages, and truck and inland transport capacity constraints.  These challenges weighed on the global supply chains and threatened to “undo” the decades-long efforts aimed at facilitating the free flow of trade and smooth supply chain operations.

To cope with the disruption and to continue to link supply chains and enable smooth cargo flows, key stakeholders in the maritime supply chain adopted several responses and risk mitigation measures. Among others, shipping carriers revisited their strategies while reconsidering the frequency of their services and adjusting the levels of maritime transport connectivity. Ports and other logistics-sector stakeholders sought to address challenges to business and operational continuity while, at the same time, maintaining the safety and the well-being of workers and the broader population. Commercial ships managed to secure continued access to ports all over the world and deliver the world’s food, energy, raw materials, and manufactured goods and components, including vital medical supplies.

The following elements proved crucial when navigating the COVID-19 disruption across maritime transport and logistics:

• Making use of international recommendations and directives, including regarding health and safety protocols.
• Being prepared and having protocols as well as emergency and operational/business continuity plans in place.
• Having an adequate organizational capacity, relevant know-how, and skills.
• Supporting workers and personnel, including by enabling remote working arrangements.
• Facilitating and prioritizing the flow of essential goods
• Enhancing cooperation between relevant stakeholders, including service providers and suppliers.
• Leveraging partnerships and international collaboration between actors of the maritime supply chain and other relevant stakeholders including government authorities and ensuring coordinated and concerted action.
• Enabling effective communications and implementing technology and digital solutions that reduce physical interaction, accelerate clearance procedures, and minimize paper-based processes.
• Improving hinterland transport connectivity and tackling physical and administrative bottlenecks.

The United Nations Conference on Trade and Development (UNCTAD) published the report “COVID-19 and Maritime Transport” to highlight the challenges faced by the transport and logistics sectors due to the pandemic, measures implemented to cope, and lessons to be learned.

The report details the impact of COVID-19 on various shipping markets, from the initial contraction of trade in early 2020 through the upswing later that year and the longer-term demand recovery thereafter.

“In terms of vessel calls and on a yearly basis, container shipping and LNG and LPG carriers seem to have been affected the least. Port calls by dry breakbulk carriers and Ro-Ro vessels were the hardest hit. Vessel call patterns varied by region, reflecting the asynchronous trajectory of the pandemic through time and geography,” said the report, which includes focus segments on Africa, Asia, and Latin America and the Caribbean.

“By the end of 2020, connectivity of the world’s major hubs and most connected nations had improved. On the other hand, there was no sign of improvement in the liner shipping connectivity of the least-connected countries. SIDS were particularly affected by reduced vessel calls. For SIDS, missing one call might be vital for their economies and local communities as they depend heavily on maritime transport for much of their imports, including the provision of essential goods. Therefore, it is crucial that the liner shipping connectivity of SIDS, which is already relatively low, should not be further reduced,” said the report.

The report noted that some deficiencies in maritime supply chains were evident before the pandemic, even if the pandemic exacerbated them, including security and cybersecurity issues, inadequate infrastructure, capacity issues, congestion, and hinterland transportation limitations.

“A spiral of reactions – the absence of demand following the initial shock; lockdowns; standstill of economic transactions and production; revisited working practices; difficulties for consignees to collect cargo; shifts in ship capacity management by carriers; volatile utilization of warehousing and distribution facilities; and lack of containers to be filled in several production areas – all led to significant backlogs in container trade. The implications were present at both the first-mile and last-mile stages of the chain. Thus, local interruptions had a broader impact along the entire maritime supply chain worldwide,” said the report.

Summarising key lessons and takeaways from the pandemic, UNCTAD said that directives from global institutions had proven instrumental in guiding private and public sector responses.

Technology, telecommuting and digitalisation were noted as critical in the early stages of the pandemic, allowing remote, stable access to systems and documentation. Digital technologies also enabled the co-operation, co-ordination and partnerships between organisations that UNCTAD saw as essential to maintaining transport networks during the pandemic.

“Cooperation between service providers and suppliers for coordinating, adjusting practices, and identifying alternatives was essential, especially when schedules needed to be adjusted and cargoes rerouted to alternate ports. Similarly, helping the consignees and manufacturers mitigate the impact of the pandemic and related restrictions was important; for example, by suspending penalties and ground rent charges on containers caught up in the lockdown,” the report said.

One limitation repeatedly referred to in the report is how organisational and knowledge capacities compromised the ability of entities to address challenges and implement measures to face those challenges.

ICS will join the World Trade Organization (WTO) Ministerial Conference (MC12) in Geneva this week, as shipowners’ global trade association launches ‘Shipping Policy Principles for Pandemic Recovery’, setting out Calls to Action to governments as national economies seek to recover from the COVID-19 pandemic.

WTO Conference takes place against the backdrop of ongoing conflict in Ukraine, which has forced WTO economists to reassess expectations of merchandise trade growth downward to 3% in 2022, from previous forecasts of 4.7%.

WTO Director General, Okonjo-Iweala, has proposed a formal Dialogue between the WTO and the maritime transport sector, highlighting the importance of collaboration between the WTO and the global shipping industry which moves about 90% of global trade.

The International Chamber of Shipping (ICS), alongside other leading business organisations, is joining WTO Ministers from across the world in Geneva this week, aiming to deliver concrete results at the organisation’s upcoming 12th Ministerial Conference (MC12).

This Dialogue will serve as an opportunity for senior government officials and industry to exchange views on critical issues and challenges confronting the Multilateral Trading System, in the context of recent developments impacting the global economy, including the ongoing conflict in Ukraine, global energy crises and recovery from COVID-19.

Speaking ahead of the upcoming Ministerial meeting, Guy Platten, Secretary General at ICS, commented:

“We were very encouraged and fully support Dr Okonjo-Iweala’s message to the shipping industry proposing a formal Dialogue between the WTO and the maritime transport sector. There have been a number of developments which have further emphasised the need for WTO and industry collaboration this past year. ICS and the WTO, as the facilitators of free trade throughout the world, are united on many issues but none more so than our shared values and principles of open and unimpeded access to international markets.

We are committed to engaging with the WTO in this comprehensive Dialogue, and hope that our ICS Shipping Policy Principles will provide a building block for discussions between the shipping industry and governments.”

The new Shipping Policy Principles strengthen the shipping industry’s commitment to the maintenance of a rules-based global trading system and a global regulatory framework which embraces open markets and fair competition; plus strict adherence to internationally adopted standards. ICS outlines ten ‘Policy Priorities’ and complementary ‘Calls to Action’ by governments in critical policy areas, to help support efficiency of the global maritime transport system which carries about 90% of world trade, the majority which now serves the economies of developing countries.

Reference – International Chamber Of Shipping