The coronavirus outbreak could affect the growth of maritime transport in 2020, the outbreak is beginning to “have a substantial impact on the maritime industry.” assures Alphaliner and other maritime experts.
Maritime transport was recently affected by problems related to cyber viruses, hacking systems and making it impossible for ships and merchandise to enter ports (See article: Cyber attack: Shipping and The Maritime Industry). Now, the virus is a biological one. After the OMS declared the outbreak of the coronavirus as a global health emergency it is unknown whether it will be a short-term phenomenon or will last between 18 months to two years as the case of severe acute respiratory syndrome (SARS) related outbreak that began late 2002.
“China has managed to react more quickly and transparently than to the SARS outbreak of 18 years ago, however, the number of deaths is much higher in the same elapsed time interval. The 2002 outbreak that was declared at the end of 2004 resulted in almost 800 known deaths. Ten years after SARS, another outbreak of coronavirus known as MERS (Middle East Respiratory Syndrome) occurred in Saudi Arabia. It may have had less international impact, but more than 800 deaths were reported. In just over a month, the last epidemic has claimed almost 200 victims. The spread of the latter disease also seems to be much faster with cases reported from all corners of the world (15 countries to date) and more anticipated.” writes Malcolm Latarche at ShipInsight.com.
These health emergencies affect companies and industries that trade globally and consequently maritime transport, the backbone of world trade since it is the medium and victim at the same time. To date, there have been some cases of contention in maritime transport: In Civitavecchia, the Costa Smerelda cruise ship was blocked after a passenger arriving from Macau began to suffer symptoms that suggested coronavirus. In the same way, passengers were forbidden to leave the cruise until the passenger was authorized by the health authorities. Another false alarm involved the container ship CMA CGM Ural, which also received authorization after several sailors became ill after arriving at several Asian ports. In recent news, 10 passengers on the Diamond Princess cruise off the coast of Yokohama, Japan tested positive for the virus, which implies the 14-day quarantine of the offshore ship.
The International Chamber of Shipping (ICS) has given its own recommendations and also recommends following some WHO guidelines aimed at limiting the spread of the virus (see OMS recommendations on coronavirus). The commercial agency has urged all members to fully adopt the guidelines by saying that doing so can help prevent unnecessary port closures, which facilitates 90% of world trade, including the transport of medicines that support the health industry, as well as food, fuels and supplies.
The moment of the outbreak of the coronavirus coincides with what is traditionally a quiet moment in the transatlantic business after the Christmas and New Year holidays and the subsequent Chinese New Year, which runs until the beginning of February. That means that the impact on trade has been limited, but there are already indications that less fuel is needed due to travel restrictions and that in turn affects the transportation of oil and the transportation rates of oil tankers. Any port closure that may occur would be an additional shock absorber and could affect other types of cargo, indicates Malcolm Latarche at ShipInsight.com.
He also shares that at the time of the SARS outbreak in 2002, some analysts estimated that it had cost the world economy $ 50 billion (estimates varied from $ 30 billion to $ 100 billion) with particular impacts for China and Hong Kong in terms of GDP. Today the impact could be even greater, especially since China has become much more important in terms of economic status and the engine of trade in many sectors. In 2003, China generated 4% of world GDP, but last year it was 16%.
Coronavirus economic environment
The trade war between the United States and China has impaired confidence and affected maritime transport, so the coronavirus could be a blow and delay recovery. A prolonged recession will exacerbate financial problems for shipowners caused by the need to install any additional ballast water treatment system at the cost of complying with the sulfur limit of 2020. This could be compensated in the short term if prices of oil fall and bunker prices follow the same trend.