IUMI 2020 – Impact on marine generally less than on other transportation

Although the impact of the Covid-19 pandemic on shipping had been “harsh, severe and dramatic”, the maritime sector as a whole (with the notable exception of the cruise ship sector) had suffered less and recovered more quickly than most transportation sectors, reported Stephen Gordon, managing director, Clarkson Research Services.

Speaking as part of the President’s workshop on the opening day of IUMI 2020, Gordon said that gross domestic product globally was averaging minus 4.9% year on year. He noted that this compared with a decline of 2.5% year on year at a similar point in the global financial crisis of the late 2000s.

The seaborne trade basket was now about minus 4% year on year, back from a 10% year on year decline recorded in April and May. Starting from the previous base assumption of 3% growth in 2020, this meant that “we expect to lose almost a billion tons of trade this year”, said Gordon.

The significance of China in global shipping trade has buffered the impact on the marine sector as a whole. While the cruise industry, which was still mainly focused on the US, was down by about 80%, China’s expected GDP growth in 2020 of 2% (down from a pre-Covid-19 estimate of 6%) was helping support the bulk carrier, tanker and container ship sectors. Globally there had been about a 4.1% decline in tons year on year and a 4.6% decline in ton miles. “The impact could have been a lot worse”, said Gordon, noting that China port calls for deep sea cargo (above 20,000 dwt) had now normalized at about the same level as last year.

Globally, deep sea port calls were down by about 10% year on year, but this compared with far greater falls in other transportation sectors such as air cargo. While ferry port calls were down by 44% year on year, this had to be looked at in the light of the fact that passenger air was down by in excess of 90%.

Looking at the macro-economic impact overall, ferries, cruise ships, car carriers (still 12% dwt idle with the number of cars moved by sea expected to fall this year to 16m, from 21m in 2019), plus the oil and gas-market related vessels such as FPSOs, jack-ups etc, were all significantly hit.

However, Gordon said that in other volume markets, things could have been a lot worse. Tanker storage peaked at 10% of the fleet in April/May, compared with an average of 2%. Containerships idle peaked at 10% of teu, but have recovered to 4%. Charter rates were, he said, now on an upward curve.

Average vessel speeds declined significantly for a while, but are now picking up again. Other significant dips in April and May, in secondhand sales, demolition, and deliveries had all picked up again.

One factor that made Gordon optimistic about the future was that, unlike in the aftermath of the 2009 financial crisis, when fleet growth hit 9%, “we now have a low order book and low fleet growth”. He said that this was good news from a supply side perspective.