Tackling Covid-19 freight challenges, together
The Covid-19 pandemic has brought unprecedented disruptions and challenges for vessel operations and chartering, largely due to the additional contractual, operational and trade restrictions caused by strict preventive measurements imposed by ports and governments.
COFCO International’s Freight Department – which supports the company’s commodity trading by ensuring the smooth movement of goods for safe and timely delivery of its physical trade - is responding to this with flexibility and foresight. This is based on the experience and skills of its operations and chartering teams, working closely together from their office in Istanbul, Turkey, to ensure record results, with the processing of more vessels than ever before.
“When Covid was at its peak, we were at the peak of vessel operation because world trade has to continue without delay, with all countries wanting to trade with China,” says Ulunay Terzi, Global Head of Freight Operations. “Each operator was dealing with more than 20 vessels, sometimes 25, working 16 hours a day to handle all the operations, and we managed this successfully.”
The chartering team ensures the business has the necessary vessels at the right price and its work is complemented by the operations team, who are responsible for the day-to-day work of the vessels. The chartering department was originally based in Turkey because there is a strong pool of experienced seafarers in the country, and COFCO International is a particularly attractive employer as a global business whereas most local companies are focused on coastal shipping. When COFCO International acquired Nobel Agri in 2015, it took over the latter’s operational team and chose to maintain its location in Turkey to complement chartering.
“Some companies have operational and chartering departments in different locations, but for us it is unthinkable. It’s so important that these people can work very closely together,” says Alessio La Rosa, Global Head of Freight for COFCO International. “We wanted people with hands-on experience – former captains, engineers and lawyers – to provide a broad skillset which would not be available in Switzerland. And since we put the two teams in place together, the results speak for themselves, especially during these volatile times.”
The pressing challenges facing operations desks due to Covid-19 include unavailability of major shore side services, including crew change, boarding by survey and technician teams, cleaning arrangements for holds and hull and bunker operations. All of these must be handled in a timely manner to avoid default on contracts with vessel owners and potential safety issues on board.
For chartering, the issues include narrower trading limits due to restricted areas for vessels to call, minimum sailing time imposed from previous port calls to ensure quarantine, restrictions on acceptance of vessels and crew members spending extended time on board due to unavailability of crew change at ports. There are also additional clauses in charter contracts, protecting owner rights against Covid-related issues.
“If you don’t know why the captain wants to load less cargo than capacity, you can’t do anything about it. It could be related to the trim of the vessel, for example. We have all been there before and understand captains’ mentality and work together with them,” Terzi says. “It’s a real advantage to be together and communicate well among the team members in our office. It means we can share our experiences and knowledge, and this is the most important factor to solve any possible issue before they actually happen.”
Having the two teams, with an extensive breadth of skills and experience, working in the same location and cooperating closely, has helped to overcome a range of unusual problems related to Covid-19.
In one case, a vessel charted by the team was due to spend three weeks at a port where underwater inspection and cleaning, which had to be carried out before return to the owner, was available. But the port authorities brought in new restrictions after a week due to Covid-19, meaning the work could not be completed.
The operations team quickly informed chartering to consider trading the vessel to the next convenient and closer port where inspection and cleaning of hull could be conducted at the same time as cargo operations were being carried out – thus avoiding breaking the contract with the owners and losses due to slow steaming on the next job.
Another vessel was fixed to load from a port where there had not been any restrictions on arrival according to the length of time crew members had been on board. After the vessel was fixed and on the way to the load port, the operations team received updated rules which required the vessel not to have crew members on board for more than a certain duration.
Operations noticed some crew members had been on board for longer than the stipulated duration and immediately informed the owners of a requirement for a crew change. The necessary crew changes were undertaken at an interim port and the subsequent call went ahead without restraint.
Lessons for future performance
Crew changes are a particular challenge and the Freight Department puts the safety and wellbeing of seafarers first. It encourages vessel owners to vaccinate crews, to shorten contracts to ensure regular crew changes and gives Covid-19 related bonuses to mariners.
“In view of the ongoing pandemic environment, both chartering and operation teams should stay in close communication, be alert and keep all parties apprised of developments in a timely manner. This includes advance notice for intended next port calls, any type of change in rules, regulation or restriction at ports,” says Terzi.
“Most importantly, we must be proactive and quickly take the necessary actions to rectify and mitigate the impact of any such changes,” Terzi adds. “As a team of highly skilled and experienced personnel, both on operation and chartering, we focus on being proactive and most importantly attending to matters beforehand to prevent any unpleasant outcome for us and for our clients.”