India Invokes “Force Majeure” on Major Port Operations
The Indian government has ordered a national 21-day lockdown, exempting port operations, and the nation's Ministry of Shipping has directed all major ports that they are not to levy any penalties on port users for delays caused by COVID-19 pandemic.
The Ministry of shipping has therefore issued an advisory to all major port trusts for invoking “force majeure” (a clause absolving companies from meeting their contractual commitments for reasons beyond their control). Reuters has reported that Indian LNG importers Petronet LNG, Gujarat State Petroleum and GAIL have already issued “force majeure” notices.
Following the announcement of the lockdown on March 24, the Directorate-General of Shipping imposed a 14-day quarantine on ships arriving from any port in China or from any COVID-19 nation.
The pandemic has caused disruption to logistics supply chains, leading to delays in clearing goods from ports. This has resulted in some cargo owners either suspending their operations, leading to detention of containers without their fault.
Many industries such as chemicals, pharmaceuticals, textiles, electronics and automobiles are expected to suffer short-term supply disruptions due to a production shutdown in China, a study by Icra noted. The study forecasts that throughput of containers, coal and other bulk cargo are also likely to be heavily impacted, with liquid cargo like LNG and petroleum products less affected as tumbling crude oil prices buoy demand growth.
More than 90 percent of India's exim cargo is handled through ports.