COVID-19 and all of the effects of this Black Swan event have, and will continue to have a profound impact on global commerce for much of 2020, with effects felt far beyond the confines of maritime.
Despite negativity, it could be argued that never before has the importance and value of maritime as the heart of global commerce and the backbone of the logistics supply chain ever been so prominent. There are infinite story threads to follow, updated daily on MarineLink.com and in the coming editions of Maritime Reporter & Engineering News. Two key long-term trends include:
- Digitalization: Will today’s situation finally drive vessel owners to the long-discussed, yet-to-be-delivered in scale move toward a truly digitalized, connected and automated maritime industry? There are many stories emerging – world firsts – regarding leading classification societies and remote inspection technologies. Devised to save cost, time and energy; now also to promote ‘social distancing’.
- The Seafarer: Focus on the seafarer and seafarer welfare issues will take centerstage as those serving on ships globally have been working to ensure that commerce continues to flow, while facing the inability to get landside during the global health crisis.
Looking at recent market developments, a recent Bloomberg Intelligence webinar last week on Global Marine Shipping featuring BIMCO’s Peter Sand offered some early insights that will drive markets in the future.
- Bulkers & Containerships: Scrapping of older tonnage (and perhaps some weaker ship owners too) can be expected, as depressed rates and fleet valuations, combined with stringent new emission regulations will help to expedite .
- Tankers: Courtesy of an oil production battle between Russia and Saudi Arabia, tanker rates and valuations are on the rise, a bright spot, albeit likely a short-lived one, in maritime markets.
- IMO 2020/Low Sulfur Fuels: While the impact of IMO2020 was a point of coverage leading up to 2020, the collapse in oil prices and COVID-19 have conspired to make bunker fuel cheap, with VLSFO prices dropping from $710 per ton on 1/1/20 to $275 per ton on 3/23/20.