To Our Valued Customers:
We know the situation impacting all of us is evolving hourly it seems, we wanted to continue to advise you all of what we are seeing and experiencing in the market. At Laufer, we are committed to providing you with as much information as possible as quickly as possible, understanding of course that the events are quite fluid and changing rapidly.
So here is a short list of what we are seeing so far today:
The Port of Houston: The Port of Houston’s Barbours Cut and Bayport Container Terminals reopened on Thursday evening at 7:00 pm and is scheduled to be back to normal operations this morning.
Will LA/LGB/OAK Stay Open? Yes, the California seaports will remain open through the governor’s “Shelter in Place” order. The order excludes essential staff and services, which includes transportation, ports, shipping, and supply chain related industries. US Customs also remains open (more to come on a separate US Customs Update). So this will have some impact but not much on IPI cargo that gets transferred to the rail and moves inland (as of today). What is of concern for us is whether the distribution centers for receiving containers will be allowed to stay – even if only limited staffing. If not, then cargo will build up quickly in the ports as those containers will have no place to go. It may be beneficial for companies who have multiple distribution points in addition to the west coast, to divert those containers to an IPI point closest to one of your distribution centers (i.e. Chicago, NJ, KC, Memphis, etc). This is very fluid but this may be one solution.
Force Majeure and Transportation Services: Force majeure is a contract provision that relieves parties from performing their contractual obligations when conditions arise that are beyond their control, making the performance of those obligations impossible, illegal, or commercially impracticable.Should other ports or terminals around the country need to close for similar reasons to the Port of Houston, we would imagine that ocean carriers will declare force majeureas their ability to deliver to or through said terminals will be restricted or prevented. We have seen this before with the Hanjin bankruptcy when carriers were forced to discharge containers at other ports than the ports intended.
Malaysia and “Movement Control Order”: The Malaysia government has declared that the entire country will be on a Movement Control Order (similar to our Shelter in Place) effective immediately through March 31, 2020. Essential services are exempt from that order, and included in essential services are transportation services, ports, airports, and supply chain services. However, despite those exemptions, most exporters processing cargo or importers receiving cargo may not be operational because of the restrictions.
Chinese Port Restrictions: The Chinese port of Fuzhou, and we expect others to follow, is restricting vessels arriving from nine countries that have COVID-19 outbreaks (Japan, South Korea, Iran, France, Germany, Spain, Italy, Singapore and the US) within 14 days of that vessels departure from one of the countries listed, in an effort to limit the spread of COVID-19 by visiting ships and their crew.Because transit times from the United States are in excess of 14 days, cargo from the US should be OK. However, many ports in China, including Fuzhou, are “trans-shipment” ports, meaning the cargo to Fuzhou often must be transshipped in an Asian regional hub like Pusan, South Korea, placed on smaller feeder vessels, and then transported to the designated port in China. This is where we suspect there will be challenges.
We truly appreciate all your support as we navigate this event together. Should you need any additional information or guidance, please feel free to contact your Laufer sales or team member.