A review of the shipping industry after 6 months of COVID-19
All the shipping industry has been affected by the coronavirus pandemic during the last six months, however, the severity of it has varied according to the different shipping sectors.
The first half of 2020 has been very different compared to the first half of 2019. The global pandemic has, amongst other things, affected the freight rates, the demand for shipping services and even the ability to sail with passengers onboard.
All segments of the shipping industry have been affected, but the overall picture is that the development of the specific sectors have gone in very different directions when comparing the development in the international maritime markets during the first half of 2020 with the first half of 2019.
On the one hand, the container vessels have had a three percent higher earning, the product tankers have had 114 percent higher earnings and the oil tankers have had 188 percent higher earnings. On the other hand, the earnings for dry cargo has fallen by 27 percent. This is all shown on a new analysis report from Danish Shipping.
“Overall, it has been a turbulent six months for a big part of the merchant navy. The tanker market has been extraordinarily good due to a lack of storage capacity during the spring, while the dry cargo market promptly followed the effect of the global recession,” says Jacob K. Clasen, Deputy CEO of Danish Shipping.
Nevertheless, the tanker market has begun to normalize after the oil-producing countries started to reduce the production.
Substantial overall decline
Despite increased earnings in some sectors of the shipping industry in the first half of 2020, the overall picture for maritime transport appears to be negative this year as world trade declines and there is less demand for transport. The expectation is that transportation of goods by sea globally will fall by 5.2 percent during 2020.
“Although some have been able to increase their earnings despite the COVID-19 virus, it has not been an easy first half-a-year for the shipping companies. Dry cargo has been very challenging, and the offshore market has also been difficult. Moreover, the ferry and passenger ships have been in a situation where for a long time there has been very few passengers and many restrictions,” says Jacob K. Clasen.
In addition to a market with generally lower demand, the big challenge has been overcoming the crew change problems - getting crews on and off the ships.
“The problems around the crew changes have taken up an incredible amount of time in the last six months and still do. It is undeniably difficult to run a shipping company when it is so complicated for the crew to sign on and off the ships. We have found part of the solution in Denmark working together with the authorities, but we cross our fingers that the situation will normalize in the rest of the world soon,” says Jacob K. Clasen, Deputy CEO of Danish Shipping.