The watchdogs at China’s Ministry of Environment probably weren’t surprised at the shipping delays recently caused by the heavy smog in the major ports in northern China. But the shippers were.
“Most of the time we can berth in one or two days,” said an officer aboard the 119,503 deadweight tonne Nord Vela, anchored off Caofeidian in early January. “But we’ve been waiting four days already.”
The loading and unloading of ships has had to be suspended several times since December. The reason? Poor visibility due to heavy smog. The result? Hundreds of ships sitting idle in China’s ports, waiting to offload cargo into key industrial hubs. And when the smog lifts, shippers have to contend with huge traffic jams.
The shipping industry itself has contributed, in part, to the escalating smog problem in China and elsewhere. Shipping accounts for 15 to 30 percent of nitrogen dioxide emissions globally. Back in August, government agencies in China issued a set of national standards aimed at curbing emissions from the shipping industry. The new standards, however, will take a while to have an effect, and authorities have yet to spell out penalties for shippers who fail to meet them.
Impact of the delays
According to an article from Reuters, “Every extra day a 180,000 deadweight tonne capesize ship waits outside a northern Chinese port to unload its iron ore cargo costs the charterer about $12,000, based on current freight rates, excluding costs for crew salaries and supplies, as well as fuel.”
Multiply that by the estimated 300 ships delayed in China’s northern ports, and the financial impact alone becomes substantial.
But there’s a ripple-effect, as well. The congestion messes up shipping schedules, calling into question the availability of ships languishing in ports socked-in by smog. And in some instances, the delivery of raw materials, such as coal and iron ore for China’s power stations and steel mills, has been delayed for weeks – resulting in hundreds of thousands of dollars in extra shipping fees.
Some operators, looking for ways to circumvent the smoggy gridlock at the Chinese ports, have opted to charter other ships at short notice. But that "Plan B" has come at a cost -- and those operators have had to pay rates well above the usual. For example, the capesize charter rates from Western Australia to northern China rose from a seven-week low of $4.93 per tonne on December 15 to a five-week high in January of $6.37 a tonne.
Speaking of the delays the smog has created, business analyst Tim Treadwell pointed out a certain irony. “We provided a lot of the raw materials that created the smog,” he said in reference to the shipping industry, “and now we’re victims of our smog.”
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