Ben Eastick Written by Ben Eastick

Port closures: how coronavirus restrictions could affect sugar supply

The global pandemic and subsequent measures to control its spread have led to the closure of ports vital to the sugar industry. As a result, both imports and exports have been interrupted without warning, potentially impacting the availability and price of sugar across the world. What could the effect of these port closures and restrictions be for the global sugar industry? We assess below.

Port closures: an impact felt the world over

Port closures were predicted as early as May and June of this year, once COVID-19 began to reach nations such as India and Brazil. Vessels have since been caught in month long queues due to a combination of factors, primarily the fourteen-day quarantine required for bulk carriers where crew members have tested positive. As restrictions and quarantine periods, along with the spread of the virus intensifying, continue to change across different areas and countries, many ports are being forced to close, often for undefined periods of time.

The uncertainty in supply chains caused by these circumstances are exacerbated by additional costs of ships staying in ports longer than expected, additional pay for overtime of crew members and the panic to stockpile to guarantee supplies to customers. The impact, therefore, has been a sudden and unprecedented shift in operating models for the entire sugar supply chain. By and large, it has answered this call, resulting in even more robust lines of supply than experienced before the pandemic.

Europe

European ports have generally been operating normally but with enhanced staff safety measures. They did, however, experience an average of 50% reduction in vessels in May. Sugar itself experienced a drop in exports for the first 11 months of 2019/20, down to 746,000 tonnes compared to 1.542 million tonnes for the same period in 2018/19, this follows the pattern of recent years, with 2018/19 also experiencing a reduction from the year before.

Enhanced safety measures have helped prevent staff shortages and port closures.

Blank sailings (cancellations of visits to certain ports) have been used to correct imbalances in supply to different areas and changes in demand. After early reductions in ship calls, largely caused by lockdown restrictions in Asia, container volumes have sustained well. Imports of sugar for the first 11 months of 19/20 dropped fractionally from last year, only down 20,000 tonnes, so that EU sugar stocks maintained expected quantities.

Europe experienced an initial reduction in volumes of cargo, although this has been dependent on the cargo type. Food and medicine related cargo have, for the most part, continued to arrive in normal quantities, so ports that accept these are continuing to operate as usual. Once Asia’s supply had resumed and the sudden demands of lockdown overcome, amounts of cargo and imports were able to return to just below the previous year.

Africa

The response to COVID-19 has varied across Africa. Some countries, such as Kenya, opted for full lockdown and closing borders, while others, such as South Africa, decided against port closures, instead banning crew changes. African countries were predicted to be the least affected worldwide, but possibly have some of the highest fatality rates. Where data is available, however, survival rates are higher than expected, meaning measures are being relaxed and most ports are staying open for much needed imports and exports.

Mauritius, located 1200 miles off the African coast, is arguably the most crucial of the continent’s ports for the sugar industry. As a small island that relies on exporting sugarcane for much of their income, it has had to find a balance between maintaining income and ensuring the safety of port staff and the general population. Its strict COVID-19 protocol, involving temperature checks and crew quarantines, slowed the delivery process but allowed the port to remain operational, a huge boost for the sugar industry, especially manufacturers in Europe. Some of this work, however, was undone by the recent oil spill in the region, forcing the ports to close in order to begin clean-up operations.

South America and the Caribbean

Ports in South America and the Caribbean have also remained open with increased measures in place to control coronavirus. Caribbean ports have shown an average decline in activity of 4.8% for January to June 2020 compared to the same time last year, where Central American ports averaged a decline of 7%. Despite this, certain ports in Colombia and Panama have seen an increase in container throughput over that period.

While there has been an overall decline in activity in Caribbean ports, some have seen an increase in container processing.

While ports have stayed open and some have prospered, the safety measures have slowed down the process of on and offloading cargo. This was particularly prevalent in Brazil, where pre-existing vessel backlog was worsened by social distancing measures, absent port staff and quarantined ships with confirmed COVID-19 cases.

Asia and the Pacific

After the initial spike of Covid-19, Asian ports restricted ships to and from their ports, particularly in China, the epicentre of the global pandemic. While January figures were stable, the closure of factories for two weeks reduced export volumes considerably, intensified by many container lines cancelling trips through Chinese ports.

The fear of a resurgence in coronavirus has seen a new tightening of quarantining restrictions, meaning ship’s crews are stranded at sea or unable to disembark. As with other areas, Hong Kong and Singapore have issued new measures, including quarantining crews, limited crew changes and virus tests.

Generally, the coronavirus pandemic has been well managed and continues to be monitored and adjustments made accordingly. We can move forward with confidence having faced and survived the uncertainty and disruption of the first wave of coronavirus globally, and now have more robust plans in place for the foreseeable future. If this has proved anything, it is the resilience and adaptability of the infrastructure and organisation of ports.

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