The Maritime Supply Chain Combating the Coronavirus Crisis - Delays, Recovery, and Camaraderie
Tuesday, March 31, 2020
Posted by: Laura Bird
This article was first published in the March 2020 edition of the Maritime Bulletin. Read the March Bulletin now!
With over 450 member companies, the Virginia Maritime Association is a hub of knowledge, connections, and camaraderie for maritime supply chain professionals. In response to the rapid spread and the dramatic impacts of the COVID-19 Coronavirus being felt across the globe, the VMA reached out to members and port partners to ask what they are experiencing and how they are adapting.
A Message from the VMA President
“This is a public health crisis that needs to be taken extremely seriously. Following CDC and government recommendations is incredibly important for every business, particularly those in our industry,” said Mike Coleman, President of the Virginia Maritime Association and CV International. “The sooner we can contain the spread, the sooner we can get back to business as usual and the less likely we are to see broader disruptions in the maritime and supply chain space.
“The COVID-19 pandemic continues to spread across the globe, and the entire international shipping community feels its impact. Just as Europe and North America were preparing for a rebound of import volume after China’s month-long closure to contain the pandemic, western economies are reeling from the implications of their own restrictions and shutdowns to slow the spread of the virus.
"Hopes for a strong springtime surge in volumes from China are diminishing as the reality of reduced consumption prompts US and European importers to pull back on orders and cautiously prepare for the recession that will shape the remainder of the year. Carriers are planning aggressive blank sailing programs to help offset slowing demand. The landscape of our global economy has been completely transformed in a matter of weeks. We recommend forecasting as early as possible, and frequent communication with service providers.”
Virginia Port Authority
The Virginia Port Authority (VPA) has been able to keep their facilities fully functional, while making necessary modifications to keep everyone safe and healthy. The VPA maintains constant communication with the ocean carriers and cargo owners to better understand their needs and expectations and to ensure the necessary manpower and resources are ready to handle the vessels and cargo. They have also modified some terminal access systems to provide the necessary social distancing and are having the common areas regularly cleaned.
“The Port of Virginia team, its labor partner, the International Longshoreman’s Association, the motor carriers servicing our terminals and all of the port’s stakeholders have been actively collaborating to ensure this port is fully-operational,” said John F. Reinhart, CEO and executive director of the Virginia Port Authority. “Through their effort and dedication, we are working vessels and moving the exports and imports that are so important to the Virginia economy at this moment.”
The VPA stated that import volumes are down, as expected since the outbreak, but they have leveled-off. Based on conversations with their customers, the ocean carriers, they expect to see some recovery of imports in early April as manufacturing in Asia regains its strength.
Longshoremen are considered essential to keeping vital goods moving across the docks. From food items to paper goods, to medical supplies, International Longshoreman’s Association (ILA) workers are on the front line keeping our nation supplied and our economy healthy.
“On behalf of the International Longshoreman’s Association, I want to thank the workforce for the dedicated and professional service they have provided the Port and the industry as the world deals with the Covid-19 Crisis,” said Tommy Little, International Vice President of the ILA. “I would also like to thank the employers for their response regarding taking the necessary steps to provide safe working conditions for the workforce. As we continue to work together to safely deliver the valuable products and goods to our industry, Commonwealth and communities, let’s keep the world in our Prayers.”
Terminals are keeping in contact with the union and ensuring additional safety measures to keep them safe. The Hampton Roads Shipping Association has set up an online hiring system, allowing workers to be dispatched from their homes. On location, equipment is being regularly sterilized, training has been put on hold, office workers are telecommuting when possible, and social distancing is being observed as best as possible.
“What we are doing here will keep our workforce safe,” stated Roger Giesinger, HRSA’s President and Chief Negotiator. “I appreciate everything that is being done by management and union leadership.”
According to Bobby Scott, Head of Agency Administration at T. Parker Host and co-chair of VMA’s Coal Committee, there is no noticeable decrease yet in coal loadings at the Hampton Roads terminals, despite some U.S. coal suppliers deciding to idle mine production for two weeks.
“U.S. coal exports were already on the decline compared to 2019 before the COVID-19 virus became an issue,” he said. “On March 18, the world’s largest steelmaker, ArcelorMittal, declared Force Majeure and announced cuts to production, so it remains to be seen how that will affect U.S. exports.”
Both railroads, CSX and Norfolk Southern, have been making strong efforts to not delay shipments from mines to the terminals, and the coal export terminals are currently operating under normal status, Scott explained. “We have not yet noticed any other effects on the coal supply chain and it is hard to speculate about the coming weeks at this time.”
Freight Forwarders and Customhouse Brokers
Valerie Sutton, the Associate Vice President of Steer Company and the Chair of the VMA’s Freight Forwarders and Customhouse Brokers Committee, explained that the outbreak has slowed down shipments, both airfreight and containerized.
“Some of the shipments we arrange from origin are being affected. We’re handling FCL, LCL and airfreight shipments out of Italy, Germany, Spain and many Asian countries currently. The cargo is just sitting in some cases.” Sutton said. “…and containerized freight can’t move out of some parts of Asia, which hinders our USA exporters who depend on that equipment to turn around. The coronavirus is going to impact international shipping for some time to come, but when commerce gets rolling again, we need to hang on to our hats!”
Sutton also shared that Steer Company and many of their clients are successfully working remotely, although she and her coworkers come in as necessary to handle original documentation required by steamship lines and some government agencies. Thankfully, APHIS and CBP will accept electronically produced versions of phytosanitary certificates and PPQ Forms may be emailed during the COVID-19 Emergency.
Ed O’Callaghan, President of Audax Transportation-Century Express and chair of VMA’s Inland Transportation committee, expects truck drivers to have a rough road ahead. He explained that Century Express’s March volumes are 35% lower than February. As a result, their drivers, who are 1099 workers paid by the trip, can expect difficulty meeting monthly financial obligations for at least three months. Century Express is currently considering non-interest loans to drivers.
“As China returns to production, inbound containers should not be seen until the last week in April,” O’Callaghan stated. “Europe will recover later than China, so European inbound freight would not be anticipated until late May. Truck driver levels will probably be extremely stretched to process the extreme volume of imports that will arrive to restock the North American inventories.”
He has also noticed some other changes on the supply chain. “Shortages of empty containers are preventing exports. Refrigerated empty containers are in an extremely high demand forcing bookings to be cancelled or postponed to later vessel callings,” O’Callaghan said. “Some warehouses are imposing limited hours of operation.”
Terminal Operations (non-container)
Considered essential, marine terminals remain open for business, explained Grant Narelle, President of Norfolk Oil Transit and co-chair of VMA’s Terminal Operators committee. They are adapting to and following recommended guidelines like washing hands, social distancing, wiping down surfaces and equipment, and telecommuting whenever possible. New practices are also being put in place to better monitor exposure level for those boarding ships.
“Before boarding, individuals have to sign release forms stating they are not sick or carrying a fever,” Narelle said. “Gate passes are issued to visitors only after they fill out a checklist of whether the person has a cold or has recently traveled outside the country.”
Staying in regular communication with customers helps Norfolk Oil Transit anticipate their ever-changing needs. “There seems to be a consensus that this breakdown is going to last for several months, thankfully we can all look out for each other through this fantastic Association,” stated Narelle. “I encourage you to keep sharing your creative ideas and reach out to the VMA with suggestions, comments or ideas to help us all live through this most unprecedented time.”
U.S. Coast Guard
The U.S Coast guard is handling this very seriously, following the direction of the President and the CDC, while also working closely with the Virginia Department of Health, Customs & Border Protection, response groups, and local port partners like the Virginia Maritime Association, the Virginia Port Authority, and NOAA.
Captain Kevin Carroll, Sector Commander, U.S. Coast Guard Sector Virginia, stressed that the USCG has always had regulations in place to screen mariners and requiring vessels to report anyone who may need medical attention.
In specific response to the initial outbreak of COVID-19, the USCG closely monitors incoming vessels, especially those coming from the highest risk countries. Vessels from those countries face a 14-day incubation period. During this period, if no one is sick, the vessels will be allowed to arrive and offload. Even during this time, the crew have limited access to shore, and most will be required to stay on the ship.
In the event of exposure on a smaller vessel, the USCG says to:
- Seek medical attention
- Monitor the crew
- Decontaminate the vessel.
“Safety of life is a top priority, as well as maritime transportation,” said Captain Kevin Carroll. “Marine transportation is centerstage.”
Sector Virginia requests to be notified (add a phone number from one of the MSIB’s) of any actual or imminent disruption to port facilities or any aspect of our Marine Transportation System due to COVID-19.
Customs and Border Protection
U.S. Customs and Border Protection continues to process cargo as there has been no identified threat as it relates to cargo shipments. CBP officers use a combination of traveler history records, questioning, observation, and self-declarations to further identify individuals requiring enhanced health screening by the Centers for Disease Control and Prevention (CDC).
Currently all CBP ports of entry are following the same operational guidance as issued by Presidential Proclamations and the Department of Homeland Security. If CBP observes a traveler with symptoms of COVID-19, they will refer them to the (CDC) and/or DHS medical contractors for enhanced health screening. CDC personnel are responsible for the enhanced health screening of travelers in all locations nationwide.
CBP has issued guidance to all employees that outlines the current comprehensive use of Personal Protective Equipment including guidance regarding wearing masks in the appropriate circumstances. (using a risk-based approach).
A Message from VMA's Executive Vice President/Secretary
"During this difficult time, the VMA remains dedicated to the progress and service of our ports, our industry, and our members. As we’ve done since the beginning of this unprecedented crisis, the VMA will continue processing export documents and daily vessel reports, provide the membership with operational information, solicit the impacts and needs of the industry, and represent those interests to regulators and policymakers at the local, state, and federal levels. We are in dialogue daily, it seems, with such officials and it is clear they understand the essential nature of the work and services our members provide to maintain the supply chains of vital goods and how important our industry will be to the economic recovery of Virginia and the nation.
"It is important that our companies do our part to halt the spread of the Coronavirus by following the direction of authorities and where possible, redirecting our capabilities to provide solutions and needed resources that will help those on the front lines of this fight. The sooner we bring this crisis to an end the more lives we will save, the more we can reduce the damage to our businesses and employees, and the sooner we can refocus on economic growth.
"Until then, let’s do our part while keeping those we are responsible for safe. Let’s also be mindful of and grateful to the vessel crews, ILA and other waterfront workers, truck drivers, warehouse workers, and many others whose hands-on labor is needed each day to keep the economy and supply chain functioning."
Executive Vice President of the Virginia Maritime Association
This article was first published in the March 2020 edition of the Maritime Bulletin. Read the March Bulletin now!