How Covid-19 can add significant costs in holidays

How Covid-19 can add significant costs in holidays

Overview

In response to Covid-19, many countries have undertaken precautious measures such as curfew, lock down and state of emergency. For a few cases, the appropriate precautious measure was deemed to be general holidays.

In response to the Initial outbreak in China, the Chinese authorities extended the Lunar New Year holiday to mitigate the consequences of people returning from family visits across the country. The Lunar New year holiday was extended to include 2 February. Subsequently, many provinces in China delayed the planned return to work, while the Hubei province further extended the Lunar New Year holiday to include 13 February.

BIMCO has received several enquiries from members regarding the Chinese preventive measures. Several enquiries quote other free online information services, which are describing the delayed resumption to work as an extension of the holiday. So far, BIMCO can only confirm the additional extension in Hubei as being explicitly a holiday. All circulars presented to BIMCO are worded as a delayed resumption to work.

By 11 March, the World Health Organization declared the outbreak a pandemic. At that time there were less than 150.000 confirmed cases globally. Today, there is close to 5 million.
The declaration of a pandemic immediately caused a response. In the following days, BIMCO received several reports from members on lock down provisions and state of emergencies. Kuwait declared a public holiday in the period 12 March through 26 March. Subsequently, this holiday has been extended.

On 24 March, the government in Bangladesh declared a general holiday, which has been extended no fewer than seven times. With the inclusion of all other public holidays and weekends into the general holiday, it is currently scheduled to end 30 May. Since Bangladesh is experiencing an increasing number of new daily cases of Covid-19, additional extensions to the general holiday are not unlikely.

These extraordinary and extensive public holidays will have a significant impact on the counting of laytime – particularly if unfavourable clauses such as SHEX/FHEX EIU are used. In most cases essential public works are obliged to keep operating, including commercial shipping bringing in food, medicines and essential equipment.

While there is little debate concerning the above cases, holiday provisions are not always black and white. State of Emergency commenced in Jordan on 18 March during which non-essential public and private enterprises were suspended by decree. Subsequently, the Minister of Labour declared that employers should consider the suspension as a holiday with all associated privileges, and that it should not be deducted from the annual leave. Essential enterprises – such as maritime transportation – was excepted from the holiday provisions. In this case, a holiday applied to certain sectors but not for port works. The holiday associated with the suspension of work should therefore not be considered a holiday so far as computing laytime under charter parties is concerned.

Minor alterations due to Covid-19 have been applied in other countries. In Argentina, Malvinas Day was moved from 2 April to 31 March as a preventive measure. Other countries will observe replacement or substitute holidays for days otherwise observed during the time of preventive measures, such as Isle of Man which will observe a one-time bank holiday on 28 August.

Covid-19 brings a lot of uncertainty. Under the current circumstances, contractual clarity is as important as ever. States, regional government and local port authorities may undertake counteractive precautious measures. In this hot pot of information, alleged and perceived holidays may be announced as actual holidays. However, that is not always the case.

BIMCO is providing reliable and valid holiday information to the shipping industry using publicly available sources and through our extensive global network. During the pandemic, our port information database is publicly available. Use the search bar in the Ships, ports & voyage planning section to find holiday information allocated to geographical entities, e.g.:

Members are also encouraged to reach out to BIMCO:

 

Johan Conrad
in Copenhagen, DK

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