China

Looming lockdowns in China make global shipping jittery

Post By : Abhilash Shrivastava
Post Date : August 9, 2021
Share with
Reading Time: 3 minutes

The global shipping industry will have to develop contingency plans in case Covid-19 cases continue to surge in China, more so because it happens to be the world’s most important nation for shipping movements.

Already, ports like the one in Singapore and Fujairah in the United Arab Emirates have barred ships from changing crew members who have recently travelled from India, making it difficult for seafarers to be relieved at the end of their contract periods.

According to reports, the Chinese port of Zhoushan has banned entry for any ships or crew that have visited India or Bangladesh, which has also struggled with a COVID surge in the past three months.

The delta variant has made inroads into many countries defenses and China is no exception. Although, it has got some of the stringent protocols in the world yet, infection has reached nearly half of China’s 32 provinces in just two weeks. While the overall number of infections — more than 360 so far — is still lower than COVID resurgences elsewhere, the alarming spread points at the virulent nature of the variant forcing millions of Chinese to go under lockdown.

Earlier this month, health authorities in France identified the variant among sailors who were sick aboard an oil tanker, which had been to India. Too ill to pilot the vessel, it was dragged into the eastern port of Le Havre by tugboats. The men were put in isolation in a dedicated hotel.

Recently, South Africa’s port authority said 14 Filipino crew members aboard a cargo ship from India to Durban were quarantined after they tested positive for COVID. The ship’s chief engineer died of a heart attack.

What is worrisome is that the variant is deadlier and spreads like wildfire.

When a Covid-19 outbreak was detected at Yantian Port in late May, operations at the key southern Chinese export hub were slashed by 70% for most of June. Similar disruptions are on the cards in the coming weeks, while shipyards are also likely to see their delivery schedules come under pressure if any wider lockdown measures are taken.

As long as lockdowns remain confined to China, the impact on freight markets is likely to be muted, especially in the case of wet and dry freight. With a growing number of seaports and airports closing their doors to seafarers to and from India, shipping companies say it’s leading to bottlenecks in crew changes. Several companies are temporarily tapping seafarers from other nations to replace Indians scheduled to board ships.

Carl Schou, chief executive of Wilhelmsen, a Norwegian-owned crew provider, said the group sources 15% of its approximately 10,000 workers from India, mainly officers. The company stopped crew changes in India from April 24 and is looking at other nationalities to plug the gaps.

“But it’s not as easy as it sounds. Certain segments such as gas and oil tankers have very specific requirements as to competence and levels of experience,” Schou said. “Most of our pool of well qualified people come from India. So, all of a sudden, we’ve lost our most important source of officers. Going into our wider network and finding the right crew that matches the exact criteria is quite a problem.”

“For container shipping, which is more than red-hot at the moment, even a brief halt in Chinese exports is likely to ease the crunch a bit logistically so long as a lockdown only closes manufacturing sectors and not ports and terminals,” commented Peter Sand, chief shipping analyst at BIMCO.

Nick Ristic, a dry bulk analyst at Braemar ACM, said the sector would not be as badly affected as it was at the start of the pandemic last year.

“Based on the experience in other countries with prolonged lockdowns, it seems the world has learnt how to keep things running with restrictions in place,” Ristic pointed out.

Ralph Leszczynski, global head of research at Banchero Costa, like most analysts contacted by Splash, was adamant that China would not press ahead with a national lockdown.

“Larger scale lockdowns would be unsustainable economically, so can happen at local level – in a single neighbourhood or city, but not for whole provinces, not to mention nationwide,” Leszczynski said.

China has managed to carry out one of the largest vaccination campaigns this year, with over 60% of the population already vaccinated, and an 80% vaccination threshold likely to be reached by September or October.

“China will certainly try now to contain and eliminate the current outbreak, but if they don’t manage to do that, and it spreads uncontrollably nationwide, I think they are more likely to shift towards more of a living with Covid strategy thanks to vaccination in the autumn, similar to what Singapore has announced recently, rather than shutting down the whole country, which would be unsustainable economically and create discontent,” Leszczynski said.

Leave a Reply

Your email address will not be published. Required fields are marked *