COVID-19 Intensifies Global Shipping Risks

The global shipping industry, one of the most important economic sectors, is responsible for transporting as much as 90 percent of goods needed for 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, the Coronavirus pandemic has struck at a very difficult time for the maritime industry. Ongoing efforts at the time included IMO 2020 efforts, issues such as climate change, political risks and piracy, and ongoing problems such as fires on board large ships.

Not only that, when it comes to the supply chain and transportation of goods, along with maritime, on-road carrier services such as trucks, lorries, HGVs, etc., have also seen various problems. For instance, since a lot of shipping vehicles have been sitting unused for months, they might be in need of servicing and maintenance. In that case, the business with insurance covering their assets could be in benefit since they might get some amount of money. Whereas, the companies that were underprepared for a pandemic might now look for articles on – \’How to get the best value lorry insurance?\’. For them, taking care of such issues could be a priority for companies to avoid major losses due to slow or lack of business.

Anyways, the six main problems facing the maritime industry are outlined below:

1. Economic fallout

Arguably the largest impact of the Coronavirus on shipping is the economic fallout. They are disrupting production and supply chains, and damaging consumer and business confidence. This affected the logistic supply chain despite maintaining the process on online portals. The online portal might be efficient in managing business processes including the loading docks management in the ships. The pandemic has affected all business supply chains.

According to maritime analysis firm Sea-Intelligence, the first half of 2020 could see a 25 percent fall in shipping traffic with a 10 percent drop for the year overall.

Many of the world\’s largest ports have already reported reductions in volumes to date and are expecting them to be as much as 25 percent lower throughout the end of the year.

2. Cruise ships face increased liability

As a result of the pandemic, the cruise industry, which generates more than $150 billion in global economic activity and supports over one million jobs worldwide, has gone into hibernation.

Largescale 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) has put the industry on hold.

While many operators are reporting strong demand for cruises in late 2020 and early 2021, new safety measures and new routes will forever impact the industry.

3. Laid-up cruise ships present sizable risk accumulation

According to Lloyd\’s List Intelligence, some 95 percent of the global cruise fleet was in lay-up, with almost half in and around the Americas.

Recent 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. The same has been seen in Manila Bay in the Philippines.

4. 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.

According to S&P Global Platts, there was more than 200 million barrels of oil and products on floating storage in tankers, around five percent of global carrying capacity, in mid-May.

Many tankers are still idling around major oil ports and terminals in the US, Europe and Africa, with potential exposures to extreme weather, piracy and political risks.

5. Cargo damage

Although cargo transportation is recognized as essential, a number of cargo handling companies have shut down operations during the outbreak while ports have been operating under restrictions. Those impacted include shippers, air freight, and transport companies around the globe. Not only that but shipping and transportation have had to take extreme safety precautions in order to not risk the spread of the virus. The use of stretchable pallet wrap, masks, and gloves for dockworkers, sanitizing the cargo hold, and so on have all become common practices amongst shipping companies.

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 and these instances may highly affect the logistics and shipping company\’s reputation and reviews. While some businesses can opt for a Review Management Service or other professional facilities to maintain the prestige of their business; still a lot of logistic companies may not want to take a risk, which can cause the shipping industry to go into hibernation.

6. Crew welfare

Over 120 ports have implemented restrictions on crew members that have impacted the 100,000 crew members that leave their ships every month.

Due to the pandemic, ship-owners will need to ensure that they take steps to avoid introducing 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.