Seafarers in limbo as Corona pandemic hits shipping

Monday, April 20th, 2020 00:00 |
From second left: Transport Cabinet secretary James Macharia (second left) and his Interior and Health counterparts Fred Matiang’i (centre) and Mutahi Kagwe (second right), respectively, receive a consignment of medical supplies from China, flown to the country by a Kenya Airways 787 Dreamliner.

With the world in the midst of the Covid-19 pandemic, the shipping industry is already feeling the impact as the global economy heads into deep recession.

Hundreds of ship sailings have been cancelled as first ports in China, and then across the globe, have seen trade fall away – with millions of workers and consumers in lockdown.

Caught in the centre of this have been the world’s 1.6 million seafarers, on 50,000 tankers and cargo carriers.

Many of them are unable to leave their ships, or find themselves stuck in hotels without pay and unable to get flights home.

Every month, 100,000 merchant mariners come to the end of their contracts on their ships and need to be flown home. But the pandemic has halted this.

TV-less prison

 “Working at sea is often described as similar to being in prison, except there is no TV,” says former ship’s navigator Nick Chubb.

“Though my experience was usually positive, a feeling of deep fatigue sets in towards the end of a contract.

I once had a four-month contract on an oil tanker extended by three weeks, and found it incredibly difficult to deal with.

“Some of these seafarers have spent nine months away from their families already.

And it is not looking particularly likely they will be able to go home any time soon,” adds Chubb, who is now a director for the maritime technology intelligence platform Thetius.

The world’s biggest shipping firm, AP Moller-Maersk, is one of those which has halted its crew changes, and says its done so to protect them, by lessening the number of social interactions they need to have.

It adds that “the rapid changes to global travel poses a risk of stranding seafarers in locations from where they are unable to leave, or get sufficient assistance”.

Yet even before the coronavirus outbreak, the industry was grappling with major issues.

First, the need to move to cleaner fuels because of the introduction of the 2020 sulphur emissions cap by the International Maritime Organization.

Second, the fallout from the US-China trade war, and the failure of Washington and Beijing to implement the first phase of their trade agreement.

“Shipping lines have had a very hard time making money in the past 10 years,” says Alan Murphy, chief executive of analysts Sea-Intelligence in Copenhagen.

For example, for a $100 (Sh10,663) pair of trainers, the cost of ocean transport will be a fraction of that - just 10c.

This makes the distance that goods travel to market irrelevant in cost terms. And it is why China, with its low labour costs, has become the world’s main manufacturer.

Peter Sand, chief shipping analyst with Bimco, the world’s largest international shipping association, warned at a recent webinar that 2020 could become increasingly harsh for the industry.

Rippling disruptions

“We need to make sure that local ports and terminals are kept open, to make sure that food and goods flow to where it is needed – because that’s where shipping hands a lifeline to the global public.”

Faced with the rippling disruptions to supply and demand around the globe, shipping firms have been scaling back operations.

So far, 384 sailings have been cancelled, and the first half of 2020 could see a 25 per cent fall in shipping, with a 10 per cent drop for the year overall, says Sea-Intelligence.

Chinese ports have resumed sailings in April, but many ports serving key consumer markets are still operating well below capacity.

The industry has not yet had to lower prices, but if shipping firms are forced to do so, and freight rates fall by 20 per cent – as they did after the 2008 financial crisis – and were shipping volumes to remain 10 per cent lower, “we could see operating losses of some $20 to 23 billion (Sh2.1 to 2.5 trillion)”, says Murphy.  

“That would wipe out the shipping firms’ last eight years’ worth of profits,” he adds. -BBC

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