Shipping industry challenges, during and after COVID-19


The shipping industry, in normal times, is subject to the global economy and the political influence of various world leaders.

Supply-and-demand changes in oil, steel, and a myriad of other products, and tariff wars can change the fortunes of shipping overnight.

The onset of the global COVID-19 crisis has struck the industry harder than most in the world. Shipping was poised to tackle several changes in the coming years and the next generation. But now it finds itself having to deal with a pandemic that has quickly had hard implications for seamen, shipping lines, and companies worldwide.

“Our industry was preparing for fundamental changes, but this tragic global situation has stunned the industry up and down,” said Victor Restis, President of Enterprises Shipping & Trading S.A., and one of Greece’s largest shipowners. “This pandemic has also reminded us how important our industry is to the global economy and the health and well being of citizens around the world. The effects of this situation may take time to reach their conclusion, but we know that shipping will always be a backbone of our world and its fortunes.”

Here is a look at the current, virus-related issues affecting the shipping industry and others that await when the world emerges.

Blank Sailings

According to an NPR report in early April, more than 120 ships scheduled to arrive in the United States have been blanked. One expert estimated that up to 30 percent of the freight normally scheduled to flow in would not arrive.

Blank sailings of course result in drastic reductions of hours or layoffs. Maersk, the world’s biggest container ship operator, has already warned that earnings would be lower, which will have effects through the industry. Though China has eased restrictions and is largely back to work, the prolonged effects of the virus cannot be accurately predicted yet.

“The shipping industry is subject to so many factors, such as the supply chain, global economies, and now this pandemic,” Restis said. “We need to ensure that essential goods and food are sent without delay, but as countries open up, we must reduce the number of blank sailings for the sake our economies.”

Effects on Working Crews

In normal times about 100,000 seafarers travel in and out of the world’s port each month. Routinely, new crews arrive to replace them. But give the travel restrictions, quarantines, and canceled flights, that process has been greatly disturbed and threatened to break down the global shipping system. Globally tens of thousands of sailors threatened to be stranded.

According to a Bloomberg report, India reports 40,000 stranded sailors and China expects more than 20,000 by the end of May. Maersk has suspended all crew switches until May 12 to reduce the risk that crew members will be stranded or exposed to the virus.

Despite regulations to limit working hours, studies have shown that sleeplessness is prevalent among crew members and can lead to health issues and depression. According to iCALL, a free helpline for seafarers, there was a call increase of 40 percent during February.

“There is no doubt whatsoever that because of COVID, the level of difficulty to carry our a simple crew member transaction has been multiplied by 100,’’ Restis said. “But shipping in general and the vessels are operating smoothly with the understanding of all stakeholders and the unity that all of us as human beings have shown under these difficult times.”

Innovation will be required to allow for crew replacements and the well being of crews aboard ships. For example, according to Restis, crew enrollment and registrations should be carried out electronically.

Loss Prevention

“Locked down and unmanned facilities means not only an increased risk of theft and fire to the cargo, but also risk of damage to goods due to extended storage periods,” said Captain Rahul Khanna, Global Head of Marine Risk Consulting at Allianz Global Corporate & Specialty. “Transit disruptions to cargo due to lack of personnel can mean long delays to delivery times or even cargo being abandoned.”

Khanna suggests that companies implement robust planning of cargo shipments while also ensuring they have back-up plans in place due to last minute shutdowns.

Unattended cargo in warehouses brings the added threat of theft and organized crime. Companies should strengthen warehouse security and check all alarms. Prolonged staging of loaded trailers outside of warehouse locations should be avoided to decrease the risk of cargo theft and damage.

While the industry grapples with the global pandemic, it must still move towards important changes, some of which are helping with the current situation.

Digital Tools

During the pandemic, ports are utilizing digital tools in greater numbers to allow crews to remain on board and minimize visitors on board, for the safety of both sides.

“We are currently examining how artificial intelligence can make use of historical data … to improve planning through data-driven decisions, identifying trends, and predicting events,” said Malin Collin, deputy CEO at the Gothenburg Port Authority. “By doing all of that, we can create a platform for more efficient freight flows and transport movements on land and at sea.”

The port installed a digital system last year that has significantly reduced administrative tasks and face-to-face contact when issuing work permits to contractors. Automatic gates for trucks at the container terminal is another example of a positive operating procedure.

Restis also suggests the issuance of flag and class certificated electronically, more working from home roles, distant interviews, assessments and appraisals of personnel.

“I expect we’ll see an upward trend this summer in the dry bulk market, which maintained its demand levels,” Restis said. “Provided the vaccine is created and the world will not face a repeat of what we endured, I believe the market will be improved during the winter months.”

Photo by Andy Li on Unsplash