2019 Shanghai Shipping 'Crisis'

Date: April 30th
China Shipping Update: Loading via Shanghai port will temporarily resume from May 1 – May 20. Negotiations for a long term solution will continue during this period. After May 20th, shipping via stop again unless a resolution is worked out.

From: Panda Fireworks
Date: April 23rd
Memo: I personally believe Shanghai port will be closed for the remainder of the US shipping season. The fundamental reason behind the current situation is policy difference between provincial customs. Custom is independent institute from government. While Hunan n Jiangxi governments want to help the industry and resolve the situation ASAP, it’s fundamentally up to the custom. It will be resolved, but I don’t think so quickly.

From: Shogun
Date: April 23rd
Memo: We have been getting worst and worst news every day, and I would like to keep you informed that unless Yueyang port reopens before end April, and handles fireworks containers to ship through Shanghai, there is a very high chance we will not be able to ship any more containers in time for July 2019 season. In Beihai, the port did not have electricity one day over the weekend which delayed delivery of containers by one day and the scheduled containers were not loaded in time as the barge leaves tonight. The biggest problem is the feeder barges (only one company runs this route) from Beihai to Hong Kong. There were only about 4 but now they have increased to 6, however one recently also broken down. There is also a shortage of trucks, shortage of workers .. Basically Beihai port just is not able to handle the volume of fireworks containers.

From: Hua Yang Transportation
Date: April 23rd
Memo: Sorry to adv that we just received surcharge implement notice from barge company in Beihai that RMB600/Container will be applied for vessels ETD HKG starting from 27th April to 1st May.In case of container can not catch up barge due to Customs and CIQ inspection, dead freight of RMB4500/container will be applied.

From: Dominator
Date: April 21st
Memo: March 21 - Xiangshui pesticide chemical factory explosion. A major explosion occurred where 617 people were injured and at least 78 were killed. Note this was not fireworks related.
March 22 - Liuyang CIQ stopped loading of Jiangxi product after tighter interpretation of the regulations due to the pesticide factory accident.
April 2 - Yueyang Customs issued a Notice of Correction, requesting Yueyang City Lingji Newport Co., Ltd. to construct a complete set of dangerous chemical inspection sites for fireworks and firecrackers in two months or lose the Dangerous Goods license.
April 8 - Jiangxi CIQ stopped loading of Liuyang product.
April 9 - Informal meeting held in Liuyang between industry members and China CIQ. Dominator in attendance. Optimism that problems would be resolved by April 14th.
April 14 - Unexpected WeChat from Mr. Ding of Huayang Logistics announcing Huayang's decision to stop loading all containers to Shanghai Port. Four main reasons given:

1.) $200,000 per day cost associated with demurrage at Shanghai port caused by delays from China Customs.
2.) Shipping space utilization of only 30% for three weeks, feeder shipping companies are reluctant to reserve space for fireworks cabinet.
3.) Huayang directly bears the risk of an accident for any containers delayed in the port.
4.) Huayang fears the risk of customer claims if the shipments are delayed.

April 15 - Remaining Dangerous Goods License holders in Shanghai Port join Huayang in refusing to load containers bound for Shanghai until a resolution can be worked out with China CIQ.

April 16 - Fireworks Exporters begin to change all bookings to Beihai Port. Beihai port capacity is very small. Only a small percentage of Shanghai capacity. There is not enough capacity to ship all fireworks containers. If no solution found, some importers will not be able to receive their goods.

April 21 - Liuyang Fireworks General Association letter to Liuyang government "Request for resolution". The mayor of Liuyang will visit Changsha customs April 22 to coordinate a resolution.

Notes:
2019 Xiangshui chemical plant explosion
China CIQ
Yueyang Chenglingji New Port Co., Ltd.
Yueyang Chenglingji New Port is the only Yangtze River port in Hunan, the only national first-class port and an important transit port along the Yangtze River. It is located on the right bank side of Songyang Lake in Yueyang City and the Xianfeng Waterway in the middle reaches of the Yangtze River, 3Km away from Sanjiangkou. The project will construct 3 universal berths for 3,000 tons of multi-purpose wharfs, and design annual container throughput of 300,000 TEU.

The total investment of the project is 633.57 million yuan. The project is managed and operated by China Communications Investment Co., Ltd. and Yueyang Chenglingji Port Co., Ltd. and Yueyang City Highway Infrastructure Corporation. The project was developed and constructed in BOO mode. Construction started on May 18, 2007. The construction period is 2 years. It was accepted and accepted on April 1, 2009. It was officially opened on June 8, 2009, and the operation period was 48 years.

From: Shogun
Date: April 19th
Memo: We have experienced continued shipping problems of fireworks from China. It started in the beginning of March, when Hunan customs stopped allowing the loading of other provinces cargo in Hunan. Hunan has strict supervised loading to make sure all CIQ documents are correct. As a result, many containers which contained a mix of Jiangxi and Hunan or Beihai products, were loaded in Shangli or Wanzai, Jiangxi. Around 10th April, the port of Yueyang (Changsha) stopped allowing containers which were loaded in Jiangxi containing Jiangxi products, to be exported from Yueyang to Shanghai port. This resulted in many containers that had already been loaded, to be stuck in Hunan as Yueyang customs did not permit their export. Eventually over 1-2 weeks, this was resolved and the loaded containers were shipped out of Shanghai. However, Yueyang stopped allowing any Jiangxi cargo to be exported through its port.

On 15th April, the port of Yueyang suddenly stopped handling fireworks containers, as the port is not in compliance with standards to handle dangerous cargo. As of the past week, the only port to handle fireworks shipment is Beihai, which transports containers by barge to Hong Kong for transhipment to the USA and worldwide. This has resulted in serious delays because firstly, Beihai has limited barge capacity and second, shipping schedules are not regular and only Maersk, The One and APL has routing from Hong Kong to the USA that will accept fireworks. There are also no routing to some countries from Beihai/Hong Kong.

This has seriously impacted all shipments to the USA and to Europe. It is not clear when Yueyang port will start handling fireworks again. At present, containers are being loaded in Beihai with an ETD of 27th April from Hong Kong. We expect barge space from 27th April to mid May will be in heavy demand, and the barge companies will not be able to confirm spaces until a week before vessel departure.

Further to this shipping issue, is the difficulty in obtaining CIQ certification in Jiangxi, which is delaying the shipment of all Jiangxi products as CIQ certification is needed for export. Beihai customs also does not accept UN0431 CIQ certification from Hunan, so UN0431 cannot be exported out of Beihai.

From: Shogun
Date: April 9th
Memo: We continue to have problems with Hunan and Jiangxi customs. Both of these customs departments refuse to accept each others inspected cargo in their containers. That means, if we have a container of mixed Hunan and Jiangxi products, it cannot be exported from Shanghai as each province will not allow declare the necessary customs paperwork.
Our only solution at the moment is to ship out of Beihai, which for the moment, will accept Jiangxi, Hunan and Beihai cargo to be custom declared and exported from Beihai.
Pending container space, the extra transportation cost associated with the change in shipping port will be US$875.00 additional per 40’HQ container. Other fees such as Peak Season Surcharge and Cancel fee will apply.
We feel this is the only way to go right now to avoid further delays as we are nearing July season, as we do not know when the problem with Jiangxi/Hunan will be solved.