Freight rates climb as coronavirus hampers global logistics
According to instructions of Turkey’s Ministry of Transportation, all the ships that are coming from abroad are being subject to investigation about their last 10 ports of call and all crew is required to undergo medical screening before they receive permission to approach docks.
A global trader commented on the recent issues in logistics: “We are not facing any issues regarding our materials that have been already shipped. Yet, ships can not leave transshipment centers without being disinfected, which takes 10-15 days. A lack of ships mainly from virus-hit Asia pushed freight rates higher.”
Asian polymer markets have been facing a reduced number of ships as well as a lack of containers since February. The measures and lockdowns against the virus stepped up across the region pioneered by cities of China including Wuhan, the ground zero of the pandemic. South Korea, Malaysia, the Philippines, Japan and India followed suit.
According to MTS Izmir, maritime transportation in some regions have been requiring additional surcharges for shipping of goods or equipment. The cancelled port of calls to China and Far East Asia disrupted the arrival of loaded containers. Consequently, supply-demand balance has changed in Europe and Turkey while players are struggling to find vehicles or containers to ship any cargos.
Turkey’s imports of raw materials from China and Far East Asia have not seen any restrictions except for scraps of plastic, paper or waste, for which imports were already banned, noted MTS Izmir.
The region was deemed as the “new hub of outbreak” by authorities late last week. The dramatically rising death tolls caused lockdowns to be unavoidable in Italy, Spain and France.
According to MTS Izmir, inland transit fees in Europe saw steep increases due to a lack of shuttles. Drivers of vehicles with European Union plates are being kept in quarantine for 14 days. Italy, Slovenia and Croatia have closed all their borders and roads for land transits, while any vehicles that entered Europe are not allowed to return.
New shipments from Spain to Turkey are foreseen to see delays due to the quarantine period in that country. Some traders stopped taking new orders from Europe amid longer procedures stemming from containment measures.
All entrances and exits have been forbidden when it comes to Iran, which was among the countries that were hit by COVID-19 most following China and Italy. “Hundreds of loaded trucks are waiting at borders,” a PP and PE trader in Turkey lamented.
A Turkish manufacturer marked, “Freight rates have jumped by more than 50% when compared to the previous weeks depending on destination. We are struggling to find containers as no vehicles loaded with import cargos could arrive. Our exports to Iraq have been disrupted, in particular.”
Traders reported, “Our polymer cargos waited for around 2 weeks at land border but they were not allowed to enter Turkey. We had to cancel these cargos and send them back to plants in Iran.”
Meanwhile, Iranian producers are said to be continuing to deliver their cargos to China and India smoothly. An agent of an Iranian producer noted, “Petrochemical plants are running at reduced rates while plants are regularly disinfected in the country.”
Some participants reported delayed deliveries from the USA amid longer estimated times of arrival (ETA). The country stepped up precautions against the coronavirus spread with almost 6,000 confirmed so far. “Further shipment delays would not be surprising,” some players in Turkey argued.
Meanwhile, MTS Izmir noted, “We have not faced any issues regarding our February shipments and March deliveries from the US. The en-route cargos are also expected to arrive smoothly.”
What lies ahead?
“Transportation to Libya, Egypt and Lebanon is not easy these days. Container prices surged since the ones sent to China could not return. It is also hard to find containers to Europe and the US these days,” a carpet exporter in Turkey affirmed. On Tuesday, Egypt’s Customs Authority announced that import cargoes from infected areas will be subject to quarantine detention and will not be allowed to exit the port until the inspection procedures are completed.
According to a common opinion, logistic problems may not be solved soon as the ongoing outbreak keeps outlook gloomy across the board. The suspended deliveries apparently ruled out the impact of collapsing oil prices on the forwarding industry. Most players see an improvement unlikely over the short term.
Paper works may continue to take longer due to the requirements of bills of lading and certificates of origin in global trading activity. “Cargos may be kept at ports or in warehouses for longer than usual considering the recent state of emergency,” opined a seller. Players expect the logistic issues to last for a month or so, in the best-case scenario.
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