Reefer Containers Pile up in China Due To COVID-19 Restrictions

“I believe China customs responded in a kneejerk fashion to the outbreak of COVID in a huge food market in Beijing,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition (AgTC), in an interview with FreightWaves on Sunday.

“The number of reefer plugs is not the fundamental problem,” he said. “The problem now is the velocity by which reefer capacity is being processed.”

Ocean carriers warn shippers

On Friday, Hapag-Lloyd warned customers: “Chinese customs increased the inspection of import reefer containers. Import container pick-up activities have been severely impacted. As a result, reefer plugs are highly utilized, especially at the ports of Yantian and Ningbo.”

Hapag-Lloyd said that reefers may be discharged at an alternate port and held there until plugs are available. Cargo owners are on the hook to pay for additional storage and other costs.

The day before, Maersk told customers that reefer plug availability in Yantian “has reached critical levels” and that it was already diverting boxes.

It advised shippers to book directly to nearby ports such as Nansha or Chiwan. If a shipper must book to Yantian, Maersk said it will offer no guarantees on delivery time and will charge a $1,000 per container surcharge.

Mediterranean Shipping Co (MSC) warned customers on July 8 that Yantian had no more reefer plugs available.

To guarantee or not to guarantee

Chinese customs officials are asking for guarantees from food exporters that cargo is COVID-free. AgTC has drafted language that instead declares the food safe, in general.

“To demand a guarantee that there’s no COVID on a food product — that’s almost impossible for the U.S. or a Brazilian or an Australian exporter to make,” argued Friedmann.

“They don’t have complete control over the export product all the way through to the customers. Maybe it was COVID-free when it was packed. But how is the container opened? How are China customs handling the product? We don’t know. Once that container is opened, we don’t have control over the content. That’s the challenge here. But exporters are very willing to guarantee that all safety protocols have been applied — that is what the AgTC statement guarantees,” said Friedmann.

Is China accepting AgTC statement?

According to Friedmann, We are seeing mixed results as to whether the AgTC statement is accepted or not. We are also seeing mixed results as to whether the Chinese customs form guarantee is accepted or not.

This should be no surprise. Whenever China issues an import restriction, it can be unevenly applied. So, it may be that some Chinese ports will accept the AgTC statement while other ports will not. It may be that some ports may not even accept the China customs declaration. This is not unlike the situation in the U.S., where there is also uneven enforcement. Importers know that some ports are less likely to require examination of cargo than others so you want to avoid certain ports. We should not expect China to be any different.

Is geopolitics driving China customs action?

China’s concerns over COVID contamination of food imports coincide with escalating geopolitical tensions between China and the U.S.

FreightWaves asked Friedmann about a potential connection — i.e., whether shipping delays were implicit Chinese retaliation.

“I myself raised this issue at the onset. The question was: Is China up to its periodic practices of using sanitary concerns as a trade weapon?” he said.

“I believe, however, that this is not the case. They’re applying this not just to the U.S., but to other countries. I think they’re legitimately concerned about the spread of coronavirus, even though I think they’re overreacting,” said Friedmann.