COVID-19 is wreaking havoc on demand for shipping worldwide, and the speed at which it continues to spread makes it difficult to understand the consequences facing international cargo shipping companies.
As a result, they’re reducing the number of vessels at sea as a safety measure to halt the virus’s spread. However, the result is a breakdown in global supply chains. Since about 80% of the global goods trade volume is carried out by sea, the industry is facing disruptions on many levels.
Let’s find out how the international cargo shipping industry is being affected by this latest coronavirus.
How the International Cargo Shipping Industry Is Changing Due to COVID-19
The impact so far on international cargo shipping companies has been bearable. But, the more widespread the outbreak becomes, the more damage they will have to sustain.
Key Impacts of COVID-19 on International Cargo Shippers
All forms of trade-related international transport are primarily dependent on human interaction and travel, so the shipping industry is being impacted indirectly and directly.
Major shipping companies are being affected, along with the industries dependent on them, including ports and terminals. This is happening as individuals are being asked to refrain from reporting to work and travelling. Additionally, a reduction in demands for raw materials and commodities that need shipping has pushed the costs of freight to an all-time low.
Numerous companies have as a result warned about weak future earnings. Many other industries such as travel, cruise ships and related industries continue to suffer. The largest North American container conference, the Trans-Pacific Maritime TPM 2020, had to be cancelled back in March on the eve of its opening.
Segments of the Shipping Industry Affected by COVID-19
In truth, there seems to be no segment of the worldwide shipping industry immune to impact from COVID-19. Cruise ships aren’t being allowed to make port and are instead being placed in quarantine for days at a time. Many commodity vessels such as tankers and dry bulk carriers are experiencing a drop in demand. Numerous Very Large Container Ship Vessels (VLCV) are leaving ports filled at just 10% of their overall capacity. This is resulting in crude oil prices dropping which is further leading to the downfall of offshore drilling. Ship repair and building segments are collapsing as people refrain altogether from travelling. The shipping brokerage and finance sectors are also being affected as they require travel.
Major Effects of Floating Quarantine
Most of the world is in quarantine which means ships can’t enter certain ports and the unloading and loading of goods have slowed. Many container ships are stuck in dock as they wait for workers to return to ports to complete repairs and construction.
The greatest number of ships are stuck in floating quarantine zones. This is happening as many countries aren’t allowing vessels that have visited infected areas to enter until they declare themselves virus-free. Port authorities in many countries are asking vessels to submit a health declaration form before allowing them to port. Meanwhile, other companies have kept port operations active while cancelling shore leave altogether.
What International Cargo Shipping Companies Need to Prepare For
Uncertainty over how the global economy, including the container shipping industry, will come out of this pandemic means there are numerous scenarios companies may have to face. The worst case is that mass fatalities will cripple the economy, whereas the best is that the world picks up from where it left off. This seems unlikely, although anything can happen.
Although shipping lines and cargo owners hope to restore supply chains, the rapidly evolving scenario caused by the virus means assumptions at this point are inevitably inaccurate. The international cargo shipping industry will continue to suffer due to COVID-19, but it’s too soon to know what will happen. Health authorities will hopefully acquire enough knowledge to prepare a plan for both public health and the welfare of shipping companies.