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All ships that have left China on or after this date will have to wait out the 14-day quarantine period. In case, if a sickness is reported on board the ship, the Australian authorities will investigate and likely extend the quarantine for 14 more days.

Additionally, ships arriving at Australian ports are required to declare their last five ports of call. The Australian port authorities will also delay pilotage services to ships that have transited directly from China and which have been at sea for less than the 14-day quarantine period.

Singapore, the world’s largest bunkering port, has had many resident Chinese nationals returning home from the Lunar New Year holiday. Their return to work, which included crew on ships, workers at ports, shipyards and maritime technicians, is now being delayed due to health inspection and quarantine checks.

“A lot of crew are stuck as they cannot transit because nobody will accept them,” a source with a clean tankers’ owner told S&P Global Platts.

Such workers have job contracts with their employers and cannot be easily replaced either, the source said. Singapore has asked for all workers returning from mainland China in the last two weeks, to be put on a 14-day leave of absence.

QUARANTINE QUAGMIRE
Ship-operators in the dry bulk market are on the edge due to the 14-day quarantine rule in Australia, participants say.

“As such it is not a huge issue to not allow vessels to dock for 14 days since they left Chinese ports. To load out of east coast of Australia, most vessels ballast from north China and it may come down to one more day of waiting at most, which in this market is not a huge problem,” a ship-operator said.

In a scenario where a crew member gets sick, the extension of the quarantine to another 14 days would force the vessel to miss its laycan.

“A disponent owner or a ship-operator who has the vessel on time charter should be able to push it back to the head owner. But most of the BIMCO clauses are in favor of owners regarding force majeure, unsafe ports etc. and there is no wording to cover for sick crew,” said the ship-operator.

BIMCO is the world’s largest international shipping association with more than 2,200 members.

While shippers can declare force majeure due to an epidemic onshore and charterers can declare that on ship-operators, the disponent owners, who are controlling vessels, doesn’t have such an exit clause.

From our friends and colleagues at Dryad Global: Given the current scenario, most ship-operators would ask for certain clauses to be inserted even in a voyage charter party to have an exit akin to a contract getting cancelled if vessels miss laycan due to sickness etc., the ship-operator said.

FREIGHT MARKET IN FRIGHT - Coronavirus scare has further deteriorated the health of the freight market, which was already reeling from the impact of IMO 2020 0.5% sulfur regulation that required ships to run on the expensive cleaner fuel.  “I was expecting this epidemic to lend some support due to vessels being held up, but that does not seem to be the case,” a freight market source said.

The situation is such that the Baby Capesize dry bulk ships, which usually gets traded above the freight rates done on post-Panamax class ships, are going at cheaper levels.  “People are undercutting each other if they can get some cargo to move away from the Pacific basin [which is being impacted by the novel coronavirus scare],” the source added.

The market is also starting to see premiums on Capesize ships loading from east coast Australia narrowing due to the current happenings. Typically, Capesize ships ballasting from South China to east coast Australia have a “positional” advantage given that it’s a shorter ballast compared with ships coming from North China.

The fixtures done from the east coast Australian port of Hay Point to Qingdao fetches a premium of 40-50 cents/mt over the Western Australia to Qingdao route. But with many ships expected to head to east coast Australia from North China to pass the 14-day quarantine period, the premium is expected to shrink, market watchers say. A Capesize ships takes 11-13 days to ballast from North China to Western Australia.

In the gas segment, given that the LNG shipping market is currently on a longer side, participants aren’t too concerned about a potential tightening of tonnage as a result of this measure. It takes around eight days for an LNG tanker to return from China to Australia.