The global shipping industry is responsible for transporting as much as 90 percent of world trade. The number of reported total shipping losses of vessels over 100 gross tons (GT) declined in 2019 to 41 – the lowest total this century and a nearly 70 percent decline over 10 years.
Although the number of vessel losses is at a record low, coronavirus has struck at a difficult time for the maritime industry as it implements IMO 2020 (reduction of sulphur emissions), navigates issues such as climate change, political risks and piracy, and deals with ongoing problems such as fires on board large ships. Now the sector also faces the task of operating in a very different world, with the uncertain public health and economic implications of the pandemic. While risks from perils of the sea are reduced for vessels waiting at anchorage or in lay-up, new challenges have evolved which were not present in historical situations involving global economic slowdowns.
One of the biggest impacts of coronavirus on the shipping industry is likely to be the economic fallout of lockdowns and containment measures, which are disrupting production and supply chains, and damaging consumer and business confidence.
The pandemic has already started to affect maritime trade, which had already been slowing, weighed down by trade tensions and weakening economic growth. The WTO Goods Trade Barometer showed a sharp contraction in the second quarter of 2020, falling to its lowest value on record. The biggest falls were in automotive products and container shipping, reflecting weak demand for goods as well as supply-side constraints.
The first half of 2020 could see a 25 percent fall in shipping traffic, with a 10 percent drop for the year overall, according to maritime analysis firm Sea-Intelligence. Many of the world’s largest ports have reported reductions in volumes and AP Moller-Maersk, the world’s largest container shipping company, says container volumes are expected to be as much as 25 percent lower in the second quarter of 2020.
Cruise ships face increased liability
The cruise industry, which generates more than $150 billion in global economic activity and supports over one million jobs worldwide, effectively went into hibernation as a result of the pandemic. Before the outbreak, the industry had enjoyed impressive growth, with some 32 million passengers forecast to sail on cruise ships worldwide in 2020, up from 30 million in 2019.
However, large coronavirus outbreaks on board a number of cruise ships, travel restrictions, port closures and a “no-sail order” from the U.S. Centers for Disease Control (CDC) in March put the industry on hold.
Cruise operators face an uncertain future with vessels laid-up and questions over how they can operate during the pandemic. However, many cruise lines are reporting strong demand for cruises in late 2020 and into next year, and some are hoping to resume operations this summer, albeit with new safety measures and new routes.
When the cruise ship industry does return, vessels will need to operate with much more stringent levels of protections for outbreaks than in the past. In this new environment, cruise operators will face uncertain liabilities. A number of cruise lines face coronavirus-related legal action from crew, passengers and investors, while the owners of the Ruby Princess faced a criminal investigation after disembarked passengers were linked to an outbreak in Sydney, Australia.
Laid-up cruise ships present sizable risk accumulation
As of April 2020, some 95 percent of the global cruise fleet was in lay-up, with almost half in and around the Americas, according to Lloyd’s List Intelligence. Satellite imagery shows large clusters of vessels in the seas around Florida and the Caribbean, raising concerns about accumulations of risk for ship-owners and insurers alike, given the arrival of the Atlantic hurricane season. Similarly, at the end of May 2020, more than 20 cruise ships were at anchor in Manila Bay in the Philippines, ahead of the start of what is typically the most active period of the Pacific typhoon season.
Emerging from lay-up poses another challenge for cruise operators. The monthly cost of cruise ship lay-up can be between $1-3 million, but the extent of upkeep and crewing will affect the speed with which a vessel can be brought back into service.
Floating oil storage boom brings potential exposures
As the price of oil plummeted amid growing concerns for the coronavirus economy, demand for floating storage hit record levels, causing tanker rates to hit new highs. In mid-May, there was more than 200 million barrels of oil and products on floating storage in tankers, around five percent of global carrying capacity, according to data from S&P Global Platts.
Many tankers are idling around major oil ports and terminals in the US, Europe and Africa, with potential exposures to extreme weather, piracy and political risks. Tankers are also being chartered for use as floating storage, which will need to be subject to certain maintenance and contractual requirements.
Oil products stored for long periods are at risk of degradation and cargo loss. The quality of refined products can degrade over time or spoil with bacterial contamination, while some products are known to evaporate, resulting in cargo shortfalls.
Many of the 100,000 crew members that leave their ships each and every month have been unable to do so during the pandemic. Most major ports have imposed restrictions on vessels and crew — some 120 countries implemented restrictions, while 92 prohibited crew changes entirely, according to data from Inchcape Shipping Services.
Extended periods of working onboard a vessel can lead to crew fatigue, which is known to be one of the underlying causes of human error, estimated to be a contributing factor in 75-96 percent of marine incidents.
Where crew are able to leave and join vessels, ship-owners will need to ensure they take steps to avoid introducing or spreading the virus onboard. The International Maritime Organization has issued recommended protocols for crew joining or leaving a ship, ensuring safe ship crew changes and travel during the coronavirus outbreak.
The coronavirus pandemic has brought about sudden changes for cargo transportation, impacting shippers, air freight and transport companies around the world. Although cargo transportation is widely recognized as an essential activity, a number of cargo handling companies shut down operations during the outbreak while ports have been operating under restrictions.
Cargo stored in high-risk areas without appropriate security controls or protective safeguards runs the risk of large losses from fire or extreme weather events, while delays may also result in cargo damage to perishable or temperature-sensitive goods. Damaged goods and containers is one of the most frequent causes of insurance industry claims in the shipping industry, accounting for more than one in five claims, according to AGCS analysis.
Captain Andrew Kinsey is senior marine risk consultant at Allianz Risk Consulting.
In June, a UK Royal Navy destroyer and Dutch Royal Navy ship safely moored in Odessa, Ukraine, were spoofed to locations off-shore of a Russian naval base on Crimea. One week later, it was a US Navy ship moored in the same port that was spoofed (above). These are interesting cases in several ways. First, how […]
A massive fire broke out at the Port of Beirut on Thursday, incinerating a warehouse full of tires and oil within the port’s free zone. The same area was heavily damaged in the ammonium nitrate explosion that leveled the central port area and the adjacent waterfront on August 4. According to Lebanon’s civil defense agency, […]
Over the course of the past five days, the Australian Maritime Safety Authority arranged a medical intervention for an injured aboard a freighter in the Indian Ocean. On Saturday evening, the Spliethoff tweendecker Dolfijngracht called for assistance while under way about 1,000 nauical miles off the coast of Western Australia. A crewmember had sustained serious […]
The UK government’s new post-Brexit tariff regime will result in both winners and losers. The new regime is set to replace the European Union’s Common External Tariff from the end of the Brexit Transition Period on December 31, 2020. The UK’s commitment to the ongoing Brexit process and ending the UK’s transition from EU membership […]
The First DP2, Twin-Hulled SOV in the World, NB72 Groene Wind met the Sea on September 29. 2020 in Yalova, Turkey. The Groene Wind will be directly chartered to Siemens Gamesa Renewable Energy for the maintenance of the Rentel and Mermaid & Seastar (known as SeaMade) offshore wind farms in Belgium. This is the first DP2, […]
The U-Freight Group (UFL), with its considerable involvement in eCommerce logistics, says that the latest statistics showing that global e-commerce sales hit $25.6 trillion in 2018 are a further vindication of its decision to enter this sector of the international freight market several years ago. The latest available estimates, up 8% from 2017, were recently […]
DSV Belgium has solid experience in the transport of pharmaceutical products for different customers. With a pharma hub based at Brussels Airport a lot of experience and know-how has been built up over the years. Last weekend, the forwarder handled one hundred million mouth masks, an important milestone for its Belgian organisation that has put […]
With close to 100 daily cargo flights operated to a destination network spanning more than 65 cities across six continents, Emirates SkyCargo is delivering essential supplies and commodities to people around the world. The air cargo carrier is currently operating 11 Boeing 777 freighter aircraft, each with a capacity to transport about 100 tonnes of […]
Operators can continue to use pilots and other crew members who have unable to comply with certain training, recent experience, testing, and checking requirements due to the COVID-19 outbreak in support of essential operations. Additionally, this Special Federal Aviation Regulation (SFAR) provides regulatory relief to certain persons and pilot schools unable to meet duration and […]
The naval forces of the US and Bahrain recently staged a joint force training exercise which showcased the interoperability between coalition warships operating I the Arabian Gulf. Coalition Task Force Sentinel executed combined exercise Sentinel Shield supporting Sentry and Sentinel patrols in the coalition’s area of operations. The guided-missile destroyer USS John Paul Jones and […]
Astral Aviation has increased its intra-African network with cargo freighters during the pandemic. While there has been a reduction in capacity to, from, and within Africa, which has been caused by a stoppage of passenger flights and limited frequencies on freighter aircraft, Astral Aviation continues to operate cargo freighters from its Nairobi hub to 13 destinations […]
Callan Marine is serving as the prime contractor to the Texas Department of Transportation for a maintenance dredging project located at the Bolivar Ferry Terminal, in Galveston, Texas. Work began in May and is estimated to be complete in late July 2020. The project consists of the removal of 600,000 cubic yards of material and […]
Best known as a leading passenger airport serving Germany’s most populated federal state North Rhine-Westphalia, Düsseldorf has become transformed into a vital distribution point, during the COVID 19 pandemic, for medical equipment and other life-saving goods, mostly from China. Gerton Hulsman, managing director of cargo operations, reports that the handling teams are working hard to […]
Emirates SkyCargo has expanded its weekly scheduled cargo flight operations to cover 75 destinations across six continents. Through its wider reach, Emirates SkyCargo is able to transport essential commodities and other urgently needed cargo more rapidly across the world, allowing exporters and importers across markets to benefit from direct access to widebody cargo capacity. Some […]
The National Transportation Safety Board (NTSB) has released a Marine Accident Brief about an accident that occurred on April 15, 2019, involving the towing vessel DeJeanne Maria which struck the end of a submerged dredge pipeline while pushing two spud barges to the Gulf of Mexico. The incident occurred on the Mississippi River in Pass […]
Global commercial aviation charter company Albion Aviation Group is reporting that it is seeing a considerable uptake in its professional cargo broker training courses from the current global pandemic crisis and surge in charter demand. “We have completed a number webinar courses for a whole of host of companies, looking to manage their own cargo […]