The world is again witnessing another wave of the deadly coronavirus. Major economies such as that of China, USA, Japan and South Korea are suffering immensely from the havoc caused by the new BF.7 variant of the coronavirus. While the western economies do not seem to be much affected, it is the Chinese economy which is suffering the most. With the count of daily infections soaring exponentially, the manufacturing hub of the world is virtually grounded to a standstill.

This has led to an impending crisis in the global trade and commerce. Critical electronic components such as semi-conductor chips, integrated circuits and other essential raw material are in short-supply. This is because of the virtual stoppage of work in the manufacturing facilities across China. The Zero-Covid policy of the Chinese Government has not yielded the desired results and in-turn, proved to be a failure.

Such a situation has deeply impacted the maritime industry across the globe. Due to stoppage of operations in manufacturing facilities in China, the export of commodities is adversely impacted. Furthermore, the goods being shipped out of China (in containers) are facing difficulty in getting clearance from customs authorities in various countries. This is because of two reasons. First, due to workforce being scaled down in ports (through shifts and rotatory work-hours) to avoid heavy footfall and spread of the virus, there is rising delay in clearance of containers. Second, there are genuine fears that the goods may be contaminated with the BF.7 strain of coronavirus and hence, the customs authorities may have their apprehensions vis-a-vis granting clearance to containers arriving from China.

Such a phenomenon has a cascading effect on the other sectors of the economy. Non-clearance of containers will lead to claims for late delivery/non-delivery and damage to cargo. While some of the claims can be settled through negotiations and other alternative dispute resolution (ADR) mechanisms, many others will be hotly contested in the Admiralty Courts. While the claims are being disputed in courts, the problem of detention-&-demurrage will only escalate. This is due to the fact that, court cases can take a substantially higher time in getting resolved as compared to the ADR dispute-resolution mechanism. Another downside of this phenomenon is that it will lead to an increase n the workload of the already overburdened courts.

Furthermore, the common people will bear the brunt of this phenomenon. This is due to the shortage in supply of goods (and related services), inflation will start rising. Inflation rises when the commodity is in short-supply but the demand for it remains stable and gradually, starts to rise. This will lead to rise in prices of goods and services and consequentially, black-marketing of goods will be on the rise. Profiteering will increase exponentially and it is the common man who will suffer the most.

Therefore, after considering the overall situation, it will be safe to say that it will take concerted and conscious efforts to contain the spread of this new wave of coronavirus. Simultaneously, we (i.e. stakeholders of the maritime industry) need to act rationally and swiftly so that claims are settled in a speedy and efficient manner by employing ADR dispute-resolution mechanism.

Marex Media