How the Shipping Industry Responded To The Global Covid-19 Pandemic?
The sudden outbreak of the coronavirus caused chaos and panic across all over the world, led to a global lockdown, and disrupted life. Almost every industry has been adversely impacted by the coronavirus pandemic and the maritime industry is not an exception. Traders involved in the shipping industry or dealing in various domestic and international trade activities have witnessed the pandemic’s major impacts including:
1. The shipping workforce was temporarily shut down to ensure their safety and further prevent the spread of infection.
2. The complications got even worse when all kinds of cargoes via water or air were put on halt during the quarantine period as a safety measure towards preventing infection from one port to another.
The widespread outbreak of the global pandemic started from the ports of China has put a question mark on the whole global shipping industry. Due to the disrupted supply chain across the world, many countries had also imposed bans on the movement of containers & vessels, especially those that were being operated from China. Such impeded operations obstructed the logistic activities and trapped many workers onboard the vessel due to either being in quarantine or for prescribed safety issues. The shipping & logistics industry has been struggling with a tremendous coronavirus outbreak.
In this blog, we are explaining how the shipping industry responded to the pandemic.
Challenges Faced By Global Shipping Industry
Take a look at some of the major challenges that the maritime industry had to go through. Here they are as follows:
Ceasing of Ports
To prevent the further spread of the virus and ensure the well-being of the workers, various preventive measures have been imposed and port closure is one of them. The movement of marine vessels has been restricted to certain countries that need these vessels to be on the water due to the absence of any other destination port. The entry of these vessels has been restricted or prohibited disrupting marine transportation facilities across the world.
Decreased Demand of Cargo
The preventive measure towards the risk of spreading of Covid-19 has led to the decreased demand for imports and exports of goods & products between countries. Further, if the goods are even moving through ships or any other marine vehicle, they are required to follow a set of standard rules & procedures that has ultimately caused limited demand for cargo. The added complications delay the delivery of goods which is not good especially for the perishable goods due to the waiting period of 14 days or the waiting period determined by the authorities in the country. The less movement of goods and cargo also caused increased prices for the ordered goods.
Conflicts Between Owners And Charters
Charters are the individuals that hire vessels from their owners and have to face legal disputes during the challenging period of the global pandemic due to the loss of time and money. Most of these disputes are related to the delayed delivery of goods as the vessels have been hired by the charters for a limited period.
Disputes in Lay Time Settlement
The vessels are hired by the charters for a definite period at certain costs and overriding that period results in additional charges that a charter is bound to pay to compensate for the prescribed period. But the Covid-19 disruptions have put difficulties to these settlements as the vessels are restricted to enter into certain countries forcing them to be on waters for an extended period, compelling parties to pay the additional costs. Such increasing freight costs are becoming a new matter of concern for global SMEs and are causing losses to parties.
The owner of a ship is required to incorporate an infectious disease clause within their guidelines and directives that have put difficulties between the owner of the ship and charters. Both the parties seek to add clauses that benefit their agenda or clauses that maximize safety.
The decreased demand for goods & limited movement of cargo led to the bankruptcy of many small companies engaged in the maritime and shipping industry. They are unable to tackle the finances of the company during the challenging period of the global pandemic. This has majorly impacted small running companies and resulted in the shutting down of many businesses involved in the industry.
The imposed lockdown measures in the light of the pandemic have caused congested ports as the retailers and manufacturers have been restrained from picking up cargo and containers. Though some ports have remained open during the pandemic, the labor force has been reduced. This worsens the situation and disrupts the supply chain as well as global imports & exports.
Crew Change Difficulties
The crew change crisis is another challenge faced by the maritime industry. The ship operators are enabled to conduct crew changes which have been considered as a significant operational challenge giving threats to the global shipping industry. The restrictions imposed by the health & immigration authorities, plus the suspension of the international flights were the main reasons behind only 25% of the regular crew changes from March through August 2020.
Long Term Impact of COVID-19 on the Shipping Industry
As per the reports, the crisis in the global shipping industry has been largely influenced by the uneven post-covid recoveries in major importing & exporting countries. Be it supply chain disruptions, lack of shipping containers, or increased freight costs over the last year, many factors have contributed to the crisis.
While the signs of post-Covid recovery are positive, experts are forecasting how the shipping industry will respond in the future against Covid-19. The impacts of the global pandemic will likely be witnessed for a long time as the world economy is recovering. These long-term impacts will carve the path for innovation to resolve these challenges in the global shipping sector.