Impact of corona virus on the shipping industry

Corona virus has had an adverse impact on the maritime industry, with a slump in demand for goods. However, this is slowly believed to be easing off. Data from Vessels Value for April looks encouraging as compared to early 2020. Economakis said in April, “capesize cargo mile demand has recently improved in late March, led by a recovery in demand from Japan and South Korea, although Chinese figures are still low”. With rates from just under $6,000 earnings per day on 1 April – up from $2,000 in early March, it is believed that the shipping industry is on the rise. But it is not possible to make forecasts for the shipping sector once the pandemic is over.

Experts are of the opinion that post-coronavirus years will be all about digital disruption. There is a belief that the industry’s health crisis might spur investment in different segments of robotics and freight technology, which will, in turn, lead to a change in headwinds across the sector.

The maritime industry, it may be mentioned is affected on several fronts. One of them is cargo operation at ports. The need of the moment is recognition of electronic trading documents instead of “manual trade documentation”
Another problem is that of seafarers returning to India on ships that have travelled to corona virus infected regions overseas. As seafarers remain among the most affected, the DGS has instructed them to avoid shore leave in infected regions and to use shore leave only in exigencies with necessary precautions. The Director General of Shipping has asked these seafarers to “self-quarantine immediately on arrival in India for at least a period of 14 days”.

It may be mentioned that close to 1,90,000 Indian nationals are employed on foreign flagged ships, both as officers and general-purpose ratings/staff. As per industry estimates, about one lakh seafarers are engaged in Indian and foreign flag cargo vessels across the globe.

Presently, Indian seafarers aboard only those vessels which call at Indian ports are allowed to disembark, after following the standard operating procedures as specified by the Directorate General of Shipping. This is creating huge challenges for ship management companies operating in India as crew change aboard cargo vessels worldwide is not happening because none of the leading airports in the country have become fully operational so far.

At the time of this global crisis, importance of keeping supply chains open and allowing maritime trade and cross-border transport to continue cannot be stressed enough. However, the possibilities of carrier operations running business-as-usual are bleak. Shipping Operations, terminals, ports, etc., have been heavily affected due to personnel advised to refrain from traveling or reporting to work to prevent the spread of the virus.

While the predictions for the recovery and future stability of the shipping industry seem rather slow and bleak, experts believe that the disruption due to the pandemic will prove to be a catalyst for the radical reshaping of the shipping industry. The pandemic has exposed the glaring defects of the global supply chain network. The dependence on China’s demand and exports has driven the shipping industry for too long and has increased risks for the entire supply chain. Protection from such shocks in the future will be designed around increased regionalisation of trade and shortening of supply lines to help increase resilience.

One is happy to note that the Indian government and the DG Shipping are coming up with schemes to tackle the woes of the shipping industry and the seafarers.

Let us hope that the industry is able to tackle the malaise of Corona virus successfully, as the country’s economy depends, to a large extent, on shipping industry.

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