Equipment shortages expected

By Don Ehrlich :: February 25, 2020

Since announced in late January, three weeks or so now, there have been more than 80 blanked sailings to ports in China. The ports stand full of containers waiting to be imported, causing shortages in equipment at the destination. Some ports have stopped allowing refrigerated container drops as there are no more plugs available. Not only is the build up of cargo awaiting export from China an issue, the blanked sailings are leaving US cargo bound for China at ports, with more being dropped off every day, and few containers returning for refill.

Another issue is that this disease is considered a force majeure, or act of God, giving some concern on what the insurance policies will cover for logistics delays. Force Majeure clauses exist to release parties from performance obligations in the case of a disaster. However, both parties are required to use reasonable means to avoid the effects of the unforeseen extreme situation. While salvage sales can offset the issues with cargo that’s waited too long, it’s little comfort to shippers who have cargo currently on the water towards China.

Diverting cargo to other ports diverting cargo to other ports can be helpful to keep cargo moving, but still are at the mercy of land transportation issues and alternative delays arising from attempts to keep shipments moving. The issue of shortages could be greatly exacerbated by severe outbreaks in other nations and shut downs that might arise. The demand every country has for food and daily goods doesn’t recede because they don’t have equipment. As this outbreak continues, with fewer goods entering or leaving, the delays will compound. Already, CMA CGM reports that reefer plugs are full at ports across china and cargo will be diverted, and a surcharge applied.

The best offense to this situation is going to be a great defense and we encourage all of our clients to plan ahead for equipment wherever possible and reach out to your CFI representative for your perishable cargo needs. Our global scale positions us strategically to benefit our clients in their search for routings and equipment.

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