Marine Industry

2020 – An Unprecedented Year of Challenges for the Marine Industry

14 Dec 2020 News

Events of historical significance for the globe occur every year but of course some years are etched in memory. The most memorable years often relate to the outbreak or end of global conflicts or for example the first man to walk on the moon or the fall of the Berlin wall. The year 2020 will forever be synonymous with the devastation of the global economy generated by COVID 19 and the tragic number of lives prematurely lost. When the pandemic is eventually in the rearview mirror it will be an opportunity for every country to objectively reflect on their preparedness and how they responded to the challenges represented by a virus which highlighted examples of strong leadership but also examples of significant political failure to lead when it most mattered.

For the global marine industry, the impact of COVID has differed markedly from sector to sector. However, the one common impact has been that of the failure of far too many governments to designate seafarers as essential workers. Many countries whose representatives piously attend meetings of the International Maritime Organization to discuss anything and everything related to marine safety, protection of the environment and seafarers rights have completely failed in their responsibility to facilitate the repatriation and replacement of seafarers who have long since completed their already long contracts. At the peak, it was estimated by the IMO, ILO and ITF that some 400,000 seafarers were stranded and to compound the problem some countries have detained vessels for MLC 2006 non-compliance rather than enable crew changes. On the other side of the coin, there are of course an equal number of seafarers who have found themselves stranded in their home countries with no income and no prospect of employment.

From a commercial aspect, 2020 will go down as the worst year ever for the cruise industry with close to zero revenues as the world shut its doors to the entire sector. Many older cruise ships have been scrapped, sold on for further trading or repurposed. Recovery for the sector will take time and is unlikely to begin in earnest until a high percentage of the population has been vaccinated. However, the financial losses suffered by the cruise lines will take several years to make up. To their credit no new buildings underway have been cancelled but there is a dearth of new orders placed in 2020 leading to dire warnings from the shipyards that specialize in this sector. It should be noted that to their huge credit, cruise lines have gone to extraordinary lengths to repatriate their crews and replace them with skeleton manning during this period of soft lay-up. Cruise ships were dispatched across the globe to get their crews home but still many ports refused them access and it took much public arm-twisting to even gain permission for Panama Canal transits.

Both the tanker and dry bulk markets have suffered fluctuations in demand, much of that demand being driven by China as that country came out of lockdown to resume something approaching business as usual. On the tanker side, the market has been strong enough to almost eliminate the scrapping of older vessels which, when combined with limited growth in vessel supply, has resulted in an overall positive year for the sector, albeit showing weakness toward the year end.

By way of example of the challenges faced in the dry bulk market, earlier this month, more that 50 vessels carrying Australian coal were stranded off Chinese ports waiting to discharge their cargoes. This is an unprecedented situation, further compounded by the refusal to facilitate crew repatriations across much of Asia. Financially, dry bulk side owners have had a tough year despite growth of less than 3% in fleet supply. The Baltic Dry Index, currently hovering around 1200 points, has been a disappointment compounded by strained political and trade relationships across the globe, most notably between China and the U.S. and China and Australia. The increasing use of trade as a political weapon continues to shape global commerce and unfortunately shipping has found itself caught up in far too many disputes.

The container industry on the other hand has staged a dramatic recovery from the steep reduction in demand in the early months of the pandemic. A surge of Asian imports into Europe and North America has seen several months of record-breaking volumes resulting in widespread port and terminal congestion. The leading UK container ports of Felixstowe, London Gateway and Southampton are all operating beyond design capacity and in just the past week Honda has been forced to pause auto production in the UK due to a shortage of components. The situation is further compounded by a surge in trade as companies seek to cushion themselves from the prospect of a no deal Brexit.

Here on the west coast of North America, the Port of Los Angeles reported a 27% increase in October 2020 imports versus October 2019, with a volume breaking the monthly record.  There was a similar situation in the neighbouring Port of Long Beach which registered a 19% increase in imports in October year over year. Incredibly, China has announced that its shipments to the U.S. increased 46% in November 2020 over November 2019 so trade sanctions or not, the pressure on ports looks unlikely to ease anytime soon. The surge in volumes is also resulting in shortages of containers for return cargoes to Asia as ocean carriers elect to return empties in order to service more profitable Asian exports.

All this said, we should not lose sight of the fact that maritime trade requires seafarers. It is the self-sacrifice of tens of thousands of seafarers who are responsible for ensuring that our stores are full of Christmas fare, that we have the food of our choice on the table, that the lights are on, our homes are warm and we have gasoline for our vehicles. For many seafarers themselves, this will be a bleak Christmas as many have not seen their families for months and they are largely forgotten in a world often lacking compassion or the will to simply do what is right.

Wishing our readers a quiet and relaxing Christmas and may 2021 provide a COVD vaccination to all who choose to accept it.

Search

+