The COVID-19 pandemic outbreak has been causing a significant impact on people’s lives and communities. Aside from that, the global shipping sector is also affected as all countries continue to implement quarantines. This quarantine hinders the global shipping operations and logistics industry. As a result, the shipping services will continue to hold the transport of food, energy and medical supplies across the continents. Hence, this will play a critical role in overcoming this pandemic.
Up until now the characteristics of this coronavirus and its impacts on global business activity are difficult to assess. All governments worldwide are still looking for some actions and plan to resolve issues in shipping services amid the COVID-19.
What are the Key Impacts of Coronavirus on Global Shipping?
Due to the COVID-19 outbreak, international transport at the forefront of trade and dependent on travel and human interaction implemented quarantine. Hence, the shipping industry has been impacted materially both directly and indirectly.
Operations of shipping companies have been affected due to personnel having been advised to refrain from working. The demand for commodities and the raw material is also low which also decreases the freight rates. Several global shipping companies have reduced earnings visibility and weak future earnings. Even cruise, travel agency and related industries have also suffered.
COVID-19: What Segments in the Shipping Industry are Affected?
The COVID-19 pandemic affected all the segments of the shipping industry. There have been news reports about cruise ships stopped to port and placed under quarantine for a couple of weeks.
Below are some of the shipping industry sectors that have been affected by COVID-19:
There is a significantly lower demand for dry bulk and tanker vessels which also decreases the freight rates. There are reports that Very Large Containership Vessels (VLCVs) are leaving Chinese ports filled to just 10 percent of their cargo capacity. With this lower demand, crude oil prices have collapsed, which will further increase the worse state of the offshore drilling industry.
Shipbuilding and Ship Repair Segments
These also have collapsed after the implementation of quarantine, as people do not want to travel to China and South Korea. Alongside this, shipping finance and ship brokerage have also been affected as they involve travel. The shipping legal profession has been focusing on charter parties and exploring whether COVID-19 can establish force majeure. This force is a kind of variable with numerous implications for the charter shipping market.
Supply Chains and Logistics
Supply chains and logistics segments have been affected as well. All the trucking industry across the globe has collapsed too, as the government has imposed travel limitations. This prevents containers-for-export from reaching the loading dock, and containers-for-import keeps flooding on the dock waiting for the discharging vessels.
Dry Bulk Vessels and Offshore Drilling
The freight market for dry bulk vessels and offshore drilling, assets have already been weak for a while, too. Therefore, few financially unstable companies in these sectors will file for bankruptcy protection this year. This filing of bankruptcy protection may increase this year as well.
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Challenges that Onboard Global Shipping Operations Currently Facing
The crews of every cargo industry must prevent at any cost an infection from being transferred on board. They should bear in mind that the vessel’s location may have only limited medical support in case there’s an emergency.
Travel Restriction of the Crews
The crew is likely to be unable to travel to join a vessel due to travel restrictions. There are also some possibilities that they may send back to their country following the completion of their contract.
As food and other necessities transactions are limited and restricted, supplies are also limited. Finding medical and other supplies for the vessel and its crew is difficult too. There may be a shortage of mechanical and electronic parts for vessels as well.
At many ports, specialized staff such as inspectors are restricted from accessing vessels. Thus, conducting the legally required inspections like safety, environmental inspections and other operations may be severely interrupted.
Vessels are likely to experience delays, levels and quality of support from shore may reduce. The main reason is head offices, ports and shore authorities operate with emergency staff or remotely.
As of now, nobody knows what the next few weeks and months could happen under this COVID-19 pandemic outbreak. As the spread of the coronavirus expands, so are the national restrictions on movement and the gathering of people. Therefore, organizations will need to become alert and flexible to these changing circumstances.
During this time of COVID-19 pandemic, effective response strategies are crucial for the survival of all nations’ organizations across all sectors.
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