At present, the new crown pneumonia epidemic has spread globally. Since the World Health Organization (WHO) announced that the new crown pneumonia epidemic constitutes a “PHEIC” (PHEIC), prevention and control measures taken by various countries have been continuously upgraded, targeting ports and ports , Ship prevention and control measures are particularly obvious. In the era of economic globalization, what impact has the outbreak of the epidemic have on my country's shipping industry? Can you take relevant relief measures when you suffer heavy losses due to shocks? Facing the future, how should my country's shipping industry prevent and resolve major risks? With these questions in mind, the reporter recently interviewed Wang Shumin, a professor at the Law School of Dalian Maritime University.
The shipping industry has been hit hard
What is PHEIC? According to the definition of the International Health Regulations (2005), the spread of diseases between countries poses a public health risk to other countries and may require coordinated nationality response measures. Wang Shumin pointed out that the original intention of WHO's declaration of new coronary pneumonia as PHEIC was not to punish the country involved, but to control the spread of the epidemic around the world. 'Although the WHO has made it clear that there is no need to impose restrictions on international travel and trade in China, there are still other countries that have reacted drastically. The most typical is that many countries (regions) have adopted stricter quarantine on ports, ports and ships. The consequences of the control measures are no less than an international economic sanction.'
For example, as early as the end of January, it was reported that a large container ship of Yangming Shipping, named YM WARRANTY, was refused to berth at the port of Piraeus, Greece. The ship drifted outside the port for 12 hours. Only then was able to berth. YM WARRANTY has called China's Qingdao, Shanghai, Ningbo, Shenzhen and other ports. The ship has departed from China for more than 20 days, and there is no abnormal report of disease on board.
The reporter combed and found that, including the Maritime and Port Administration of Singapore, the Department of Health of the Philippines, the US Coast Guard, the Australian Border Defense Department, the Ministry of Health of Vietnam, and the Malaysian Port Authority have successively issued announcements prohibiting crews from affected ports or ships from countries (regions). Go ashore or take measures to isolate for 14 days. As we all know, when a ship berths at a port berth or anchorage, it needs to pay a berthing fee, usually based on the tonnage, length and berthing time of the ship, and the berthing fee will increase with the extension of the berth time. Therefore, when the crew is required to quarantine on the ship for 14 days, a large amount of unproductive berthing fees will be incurred, causing the cost to rise sharply.
The slowdown in production and consumption will result in a serious shortage of market demand, a sharp drop in shipping volume and voyages, and a poor shipping logistics system. Wang Shumin analyzed that at the same time, foreign trade will also suffer a heavy blow. Judging from the current situation, some foreign trade companies have been forced to suspend production and cannot complete orders, and overseas buyers have begun to reject Chinese products. If the epidemic cannot be controlled within a short period of time, a large number of exporters’ goods will be rejected, return refunds will increase, and products will no longer be sold. In addition, many countries (regions) have announced to strengthen quarantine control, resulting in port congestion and cargo delays, and many companies are unable to perform or cannot perform international trade contracts on time. This will bring serious blows to export companies.
There are still shortcomings in dealing with PHEIC
Many shipping companies lament that at present, overseas cargo cannot enter under local control measures, and cargo accumulated at domestic terminals cannot be exported. Therefore, the epidemic will end as soon as possible and the loss will be stopped as soon as possible. Then, when ships and cargo suffer heavy losses, what measures can be taken to recover the losses as much as possible?
Wang Shumin said that shipping companies usually purchase insurance for ships. When they suffer losses, they will first consider insurance compensation. However, at this stage, there is a lack of effective insurance remedies. Neither ship insurance nor cargo insurance has yet to cover quarantine expenses under PHEIC. Take the 'China Shipowners’ Mutual Insurance Association Insurance Clause' implemented on January 1, 2019 as an example. The quarantine costs covered by it refer to the additional costs incurred as a direct consequence of the outbreak of infectious diseases on ships, including quarantine and disinfection costs and consequently Incurred net losses related to fuel expenses, insurance premiums, crew salaries, material and food expenses and port charges. At present, the quarantine control of many ships is not based on the actual outbreak of infectious diseases, but the early warning measures of the port state, which are not within the scope of insurance claims.
Wang Shumin further introduced that in terms of cargo insurance, one of the special additional risks of the 'Public Insurance Company Marine Cargo Insurance Clause' is the 'Refusal Insurance', which insures that the goods are insured by the government or relevant authorities (such as customs, Animal and Plant Quarantine Bureau) refused to import or confiscate the losses, but insured 'rejection insurance', the enterprise must ensure that it holds all the necessary licenses or permits or import quotas; if the insured goods are shipped before the importing country Even if an embargo or prohibition has been declared, the insurer shall not be liable for compensation. The second is the 'Buyer's Default Insurance' launched by China Export & Credit Insurance Corporation, which covers political risks caused by embargoes or sanctions in the country or region where the buyer is located. The coverage also covers risks after the goods are shipped and not before the shipment.
In addition, the insurance company has set a higher threshold for insuring, with an underwriting amount of more than US$1 million, of which the advance deposit is not less than 15%. The higher threshold makes it difficult for SMEs to meet the requirements. 'Although there is also a short-term export credit insurance that can be responsible for pre-shipment risk insurance, this insurance is an additional insurance of comprehensive insurance and cannot be insured separately. The overall rate level is higher than that of developed countries.'
Build a diverse response plan
At present, the BCI index (Capesize Index), Panama Index (BPI), and Baltic Portability Index (BHMI) are all showing a downward trend, and the situation is not optimistic. Shipping is the main carrier of global trade, and China is a veritable shipping country. Under heavy pressure, how can my country's shipping industry resolve risks?
Wang Shumin introduced to reporters that, first of all, China’s shipping companies urgently need to understand and track the new epidemic prevention and control measures of various countries under PHEIC. If the quarantine country information early warning can be issued in time, it can be used as an important reference tool and guide for grasping the overseas port environment and preventing shipping risks. .
Secondly, the 2004 revised 'Foreign Trade Law' specifically added Chapter 7 'Foreign Trade Investigation'. Wang Shumin mentioned that in order to better implement the 'Foreign Trade Law', in 2005 the Ministry of Commerce issued the 'Foreign Trade Barrier Investigation Rules' '. According to the rules, the barriers or restrictions that my country's products or services enter the country (region) market or a third country (region) market that cause or may cause obstacles or restrictions are regarded as trade barriers. The shipping industry is a service trade. In response to trade barriers, shipping companies can use relief procedures to lodge complaints under reasonable and legal premises.
Wang Shumin finally suggested that in terms of social relief, major insurance companies can make appropriate adjustments to the PHEIC insurance clauses. In view of the current situation of ship insurance, major insurance companies can provide major insurance companies to revise the shipowner’s protection and liability insurance clauses, and provide insurance relief for PHEIC or similar emergency quarantine measures. In addition, the insurance threshold for 'buyer's default insurance' can be lowered. In the severe epidemic situation, the actual plight of small and medium-sized enterprises should be considered, the underwriting amount should be adjusted appropriately, the prepayment deposit, and the comprehensive insurance rate should be lowered. (Author: Sun Danni)
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