By Dr. R. Kannan April 01, 2020
Global trade growth slowed markedly to 0.9% in 2019 from a level of 3.7% in the previous year . The expectation was that the Trade will grow between 0.4%to 0.6% before the Corona Virus pandemic. The pandemic has reduced the potential for growth further. Current estimates predict between US$2 trillion to $3.4 trillion of income loss and 25 million job cuts Many of the countries in the world , especially in the developed world are likely to report a negative growth this year. The virus has affected more than 150 countries in the world. Governments across the world have announced stimulus measures through Fiscal policies and Monetary policies . Indian Government also announced lot of measures to preserve the Economic Growth of India.
Shipping Industry plays a major role in the Global trade and it contributes to more than 80% value of the Global trade. In line with the trends witnessed in the Global trade, Shipping Industry will also feel the impact of the Covid-19. At this moment, it is very difficult to predict how long this situation is going to last. Depending on when this crisis is likely to subside, the impact on the shipping business will be known.
One of the major revenue for shipping is tourists. The tourism industry is also undergoing the pain now and income from tourism has declined substantially over the previous years.
Some of the emerging trends after covid, which will have a short term impact on the industry include :
• Container ship visits to Chinese ports, measured both in number of vessels scheduled to call and their cumulative capacity in Twenty-foot-Equivalent Units (TEU) plunged in late January and early February.
• The ratio of missed port calls ,, scheduled vessel calls that do not occur has risen sharply to levels usually seen in late February and March.
• This year, the traffic slowdown, with both fewer scheduled calls and more cancelled ones, is occurring much earlier.
• The slowdown in port calls is occurring worldwide, not just in China. Shipping companies have been reducing scheduled capacity since about August of 2018 on most trade lanes as trade wars slow global demand for cargo capacity. A missed port call now has a more profound impact on available capacity.
• Crude oil is moved under long-term arrangements, via either annual contracts or bought months in advance. As expected, the flow of this commodity currently seems unaffected.
• Jet fuel emerges as the first oil product (transportation fuel) showing signs of a slowdown following the coronavirus outbreak.
• Amount of a commodity onboard ships that are idle. Floating storage can build up due to operational factors such as port congestion or weather delays, or it occurs because demand dropped while the ship was sailing from the loading to the discharge port. Using this indicator, we observe that although the volume of diesel in transit is steady during the same period, the amount of the fuel in floating storage – aboard ships that are idle and not moving – has soared .
• Container ship operators are slashing capacity in reaction to the prolonged shutdown of manufacturing plants.
Very Large Crude Carriers sailing to China through the Indian Ocean are speeding up rather than slowing down, reflecting that industrial commodity importers have yet to slow down their import volumes or even the speed of the ships carrying those commodities
In this situation, the global maritime transport industry has to play a major role in transporting the essential products to countries without uninterrupted availability. Food, energy and raw materials, manufactured goods and components are moving through maritime transport. It is more important than ever to keep supply chains open and to allow maritime trade and cross-border transport to continue.
Amidst the current outbreak, seafarers have come under increased checks and scrutiny in various ports. Many port states have imposed local regulations, travel and quarantine restrictions, precluding free access to seafarers. Some operators have suspended crew changes aboard ships to lessen their social interactions.
The governments should realise the importance of Maritime trade and all possible available measures could be used to reduce the burden posed by COVID-19 on maritime and cross-border trade.