COVID-19 And Maritime Sector: X-raying Impacts On Manpower, Navigation And Profits

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By George Amos

Introduction:

In response to the corona virus pandemic, lockdowns were put in place to prevent the continued spread. These restrictions on both citizens and business activities across the globe had adverse effects on the economy.

To counter this, certain activities were labeled as “essential services” including shipping and maritime operations. The maritime industry has however not been immune to the effects of the pandemic.

Manpower:

The manpower aboard shipping vessels have been adversely affected by the spread of the virus. Due to the nature of restrictions, seafarers have been treated as “high risk” personnel and cannot be changed to and from various vessels in contrary to international maritime regulations.

The effect of the prolonged stay onboard has heightened the risk of infection and also mental illness while also faced with the obvious problem of being unable to earn a living to support themselves and their families.

There has also been a huge disruption in crewing arrangements as foreign crewmen who had been hired by shipping companies cannot enter into countries by way of commercial flights and those already in the country and scheduled for reassignment could not leave.

It should be noted that by virtue of the International Maritime Organization (IMO) labelling shipping activities as “essential services”, travel restrictions for seafarers have been removed but not in every country.

Navigation:

The effects have also stemmed to navigation within the maritime industry as there is an increase in the evasion of ports of countries with high numbers of corona virus cases and deaths.

Furthermore, ships arriving from high risk areas may not be allowed to dock at their destinations for fear of spreading the virus. The Maritime Executive via data analysis software i.e. the Optix platform was able to accurately confirm that many ports are imposing mandatory quarantine time periods for vessels arriving from highly infected regions such as the Hubei province of China, Italy, Iran, South Korea and the United States.

This results in the boycott of ports by ships coming from high risk areas to avoid quarantine and minimize business cost. Another outcome is the snubbing of ports in high risk areas such as the Mediterranean which has 87 ports causing a loss of nearly 25% of global traffic volume.

Financial Profits:

The maritime sector accounts for a huge percentage of financial profits gotten by countries. The “Blue Economy” has overtime secured its place as a crucial economic pillar due to the fact that shipping is the lifeblood of the global economy as it transports 90% of global trade.

It is trite to note that financial property within the sector is linked with China, a major trade partner of several countries and a pacesetter in shipbuilding.

This caused marginal impact of the virus in January as shipping companies had initially expected low demands due to the Chinese New Year and had planned for this by blanking sailings in the container shipping industry according to BIMCO Chief Shipping Analyst, Peter Sands.

However, the demands kept decreasing as the year went on as the putting of crews in quarantine and imposing other restrictions resulted in significant setbacks for both the cruise and shipping sectors faced with order and trip cancellations, spikes in cost and drop in trade opportunities.

To put this in context, the cost of hiring a very large crude carrier (VLCC) for a year plunged by over 20% between January and February with spot earnings also decreasing by more than 70% during the same period.

The summary of the effects of COVID on the blue economy can be seen in a BIMCO blog post which stated “Earnings from the Persian Gulf to China have dropped from $103,052 per day … to $18,326 per day. Added to this, numerous contracts are cannot be executed resulting “force majeure” and frustration with no remuneration

Conclusion:

It is an irrefutable fact COVID has struck a devastating blow on maritime operations but it is a completely rectifiable situation. Local and International maritime bodies such as NIMASA and IMO must focus on ways to mitigate trade losses and ensure the welfare of seafarers to prevent the issue from spiraling out of control.

Writer’s Bio

George Amos is a 500 level law Student of Obafemi Awolowo University. He is a member of the Maritime Law Students’ Society, Obafemi Awolowo University.

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