The document discusses factors contributing to rising global shipping rates during the COVID-19 pandemic. Key factors include port congestion from quarantines and backlogs, limited port and transportation workers, and increased demand for goods from Asia to Europe and North America. These issues have led to container shortages and delays at major ports like Tianjin, China. For landlocked countries, this has significantly increased costs and times for freight. Solutions proposed include implementing trade agreements to protect small economies, calculating detention fees for landlocked countries based on border arrival, and dedicating resources for their transit cargo.

1. COVID-19 and rising shipping rates:
What are the factors in play and what can be done
Transportation, Distribution & Logistics

2. • Local quarantines of COVID-19
• Backlog of a cargo at and outside terminal
• Port congestion & Vessel delays
• Limited number of port operators
• A few number of drivers are allowed for lorries
• Increase demand of goods in USA and Europe from Asia, especially fm China
• The global shortage of shipping container
• Presence of COVID cases border area lead to closure of railway organization, limited
operational team
• Train congestion in border area and at the stations near to border
• The volume of rail transport from China to Europe sharply increased
The factors that course the surge of shipping rates

6. A boom in China-Europe rail freight volumes brings congestion at key
border crossings. Russian Railways inform from January-to-September
volumes were up 47% year by year.
Source: Theloadstar.com

7. Trade Facilitation Freight Logistics
Council
Mongolia
1%
+4000 km
1000 km
5400 km

8. Sea port and border congestion affects to Mongolian economy
Lack of trains for China transit at
Mongolian border, trains started to
stop on rw station to Mongolia
Export shipment from CHN to Europe
is sharply increased due to shortage
of train from Kaz & Rus side, start train
congestion at border area
number of containers stuck
at Tianjin reach 3000 units
Scheduled trains to Mongolia
postponed several times.
Tianjin container congestion
reach 4000 cntrs
Total number of containers stuck at
Tianjin – 4500 units/ daily
Oct.2020
Jan.2021
Apr.2021
May.2021
Jun.2021
Mar.2021
Feb.2021
Containers start accumulating
at Tianjin port
• COSCO announced change its policy to
provide own equipment , annul 45 days
free time to 7 days free Because of Tianjin
congestion , Shipping lines / Maersk,
COSCO, CMA CGM and others/ refrain to
send containers to Mongolia
• China border station Erlian is fully
congested. Over 3000 trucks goods are
stuck there.

9. Тяньжин боомтод
чингэлэг ирснээс хойш
чингэлэгийн түрээс
тооцох интервал
Чингэлэг түрээсийн
өдрийн тариф /юань/
Тооцох
өдөр
Чингэлэг ашиглах хоногт
тооцсон чингэлэг түрээсийн
зардал /юань/
20' 40' 40HC 20' 40' 40HC
1-7 өдөр 0 0 0 7 0 0 0
8-14 өдөр 85 170 190 7 595 1190 1330
15-21 өдөр 170 340 380 7 1190 2380 2660
22-60 өдөр 340 680 760 39 13260 26520 29640
60-с дээш хоног 340 680 760 60 20400 40800 45600
Нийт 120 35445 70890 79230
Ам.долларт шилжүүлсэн дүн (ханш: Ам.доллар / юань =
6.27)
5653 11306 12636
$ 95 /20’ $ 188 /40’DC $211/ 40’HC
$188 /20’ $ 377 /40’DC $422/40’HC
$ 2104/20’ $ 4209/40’DC $4704/40’HC
$ 3238/20’ $6476 /40’DC $7238/40’HC
$ 5250/20’ $11300/40’DC $12640 / 40’HC

10. Container freight charge increase
Container type 20' 40' 40HC
Difference of current rate and former rate $ 300 $ 420 $ 420
Container demurrage charge $ 5,653 $ 11,306 $ 12,636
Additional cost due to port congestion $ 220 $ 320 $ 320
Port storage charge $ 75 $ 150 $ 150
Container transloading cost $ 80 $ 100 $ 100
Total rate increase $ 6,328 $ 12,296 $ 13,626

11. 5x
Storage charge increase
Container deposit
Container demurrage
charge
Consequences of congestion at Tianjin port
Extra cost due to
port congestion Container
transloading cost
30%
Trucking charge increase
30x
Border crossing
charge increase

12. 2020 2021
Japan - Mongolia via China 40'HC 2,750.00
$ 6,600.00
$ 240
EU to Mongolia via Russia Tilt truck 7,600.00
€ 9,100.00
€ 120
EU to Mongolia via Russia 40' HC 4,600.00
€ 4,900.00
€ 107
EU to Mongolia via China 40' HC 4,790.00
$ 7,280.00
$ 152
China to Mongolia 40' HC 2,750.00
$ 7,300.00
$ 265
USA to Mongolia 40'HC 4,140.00
$ 5,350.00
$ 129
Russia to Mongolia 40'HC 4,650.00
$ 4,900.00
$ 105
South Asia to Mongolia 40'HC 2,750.00
$ 6,600.00
$ 240
Rate
Route Product Increase %
Sea freight increase 130%- 240%

13. Government measures taken to mitigate sea port
and border congestion
May.25
Ambassador of Mongolia to PRC Mr. Badral held a courtesy
meeting with Mr. Luo, Chairman of China Int’l Dev Coop Agency
Sep.18
Deputy Prime Minister S.Amarsaikhan talked to Chinese Foreign
Minister Wang Yi during SCO
Oct.12
Prime Minister Oyun-Erdene held virtual meeting with Chinese Prime
Minister Li Keqiang to resolve 4575 cntrs stuck at Tianjin before
December
Oct.28
Start dispatch everyday 3 trains from Tianjin which contributes
significantly decrease containers at Tianjin port

14. What can Government do to prevent similar
problem in future
1. When shipping goods, exporters, transport operators such as shipping companies and rail transporters, and government
organizations responsible for transportation need to study and evaluate the capacity and conditions of importing countries.
Otherwise, there is no guarantee that similar critical situation will not occur in the future. Collaboration and information sharing
between ports are needed.
2. It is a fact that importance is given to the transport operations of big companies and big countries. As a result of that, there is a
shortage of containers, and transport operations for small economies.
3. Shipping companies give 7 days of free time since arrival of goods at ports, and detention and demurrage charges are calculated
from the 8th day. However, for the goods destined for countries that are located at least 1000 km away from seaports like
Mongolia, this 7-day free time ends even before shipment leaves port. The example I have given previously clearly demonstrates
how these detention and demurrage charges badly affect small and vulnerable economies such as landlocked developing
countries. Thus, it would be meaningful if shipping companies could calculate detention and demurrage charges after 7 days
when shipment arrives at border of landlocked countries.
4. The COVID-19 pandemic shows the world is not ready for such a crisis. Provisions of the WTO Trade Facilitation Agreement
(TFA), specifically, the article on Freedom of Transit is not being implemented. Thus, it is necessary for governments to agree on
how to properly implement the TFA in the future if similar crisis occurs.

15. Some issues of Land locked countries
As a representative of Landlocked countries, we have a particular request.
1. Shipping companies give 7 days of free time since arrival of goods at ports, and detention
and demurrage charges are calculated from the 8th day. However, for the goods destined for
countries that are located at least 1000 km away from seaports like Mongolia, this 7-day free
time ends even before shipment leaves port. The example I have given previously clearly
demonstrates how these detention and demurrage charges (USD 200,0ml for half year ) badly
affect small and vulnerable economies such as landlocked developing countries. Thus, it would
be meaningful if shipping companies could calculate detention and demurrage charges after 7
days when shipment arrives at border of landlocked countries.
2. It would be meaningful if transit countries provide a dedicated space/slot for the transit
cargo of landlocked countries at terminals and ports and possibilities to load on to and unload
from train and ship without any delay and beyond schedule cargo of landlocked countries.

16. Proposal to WTO
MOREOVER, IT IS POSSIBLE TO USE MODERN TECHNOLOGICAL
DEVELOPMENTS SUCH AS BLOCKCHAIN TECHNOLOGY IN IMPLEMENTATION
OF SOME PROVISIONS(5,7,8,10,12) OF THE TFA. WE ENCOURAGE
GOVERNMENTS TO PAY THEIR ATTENTION TO THIS POSSIBILITY.

17. Thank you
for your
attention!
enkhbat@monex.mn