The Covid-19 shock waves to the shipping industry

The Covid-19 shock waves to the shipping industry

Gauci-Maistre Xynou (Legal | Assurance)
Author: 
Deborah Mifsud  

The COVID-19 pandemic has created an unprecedented crisis practically grinding the world’s economies to a halt and which in turn impacted the backbone of the world trade, the maritime industry. The impact on maritime business is wide-ranging. Lars Jensen, CEO of the Copenhagen-based provider of container shipping analysis SeaIntelligence Consulting estimated that 17 million TEU would eventually be taken out of service globally this year, whilst ports and terminals may suffer a loss of 80 million TEU of handling volume. Ever since the COVID-19 pandemic hit China’s supply crunch, it has resulted in a ripple effect in the global maritime industry whereby the EU and the US were left with insufficient transport capacity for exports out of China. Furthermore, companies wishing to export goods out of China have been faced with a depletion of air freight capacity.

As a result, consumers have been faced with changing their purchasing habits due to the fear of exposure to the virus. Consequently, a great deal of consumers shifted to purchasing goods locally as opposed to goods from other jurisdictions due to the logistics network of imported goods. The risk for disruption in the supply chain is therefore apparent which underscores the necessity to have smart and adaptive supply chains that utilise modern technology to support the supply chain and avoid any obstructions that may occur.

Disrupted supply chains may be the first adverse impact that comes to mind. Yet the complexity and multi-faceted maritime industry has been facing several more challenges on all fronts, namely crew changes and cruise liners.
 

Seafarers

Seafarers are essential for the movement of goods globally and are considered to be on the frontline of this global calamity. Seafarers have been faced with situations whereby they are required to stay onboard the vessel for longer periods than their original scheduled shift, and sometimes travel to different ports in countries affected by COVID-19, due to various countries imposing restrictions on change of crew unless absolutely necessary. As a result, some authorities are authorising extensions of seafarers service periods beyond the maximum 11 months’ time period permitted under the Maritime Labour Convention, only where strictly necessary to contain the spread of the virus. Disembarkation is not the only problem in crew changes. Seafarers who are currently awaiting deployment are concerned about possible delays in embarkation and postponement of income.

Similar to their overseas counterpart, locally seafarers’ services as established in the Seafarer’s Employment Agreement in terms of the Merchant Shipping (Maritime Labour Convention) Rules, may be extended for a maximum period of three months due to issues in repatriation. A seafarer who has a valid Certificate of Competency issued by a foreign administration that also has a Flag State Endorsement issued in terms of the Merchant Shipping Act and of the STCW Convention, may request to have the validity of their Flag State Endorsement extended beyond their expiry date should it expire during an extended period onboard.

 

Cruise liners 

Cruise liner companies have been hard hit as they have experienced difficulties when arriving at their scheduled ports. Cruise ships have been stranded at sea, unable to dock at various ports of the world as they were denied entry, travelling along the seas scrambling for safe harbour. Since passengers and crew were denied authorisation to disembark, they were forced to remain in quarantine onboard the vessels finding difficulty in returning home. U.S. cruise liners have already faced costs amounting to nearly $750 million since January as numerous voyages primarily to Asia and the rest of the world have been cancelled. The Cruise Lines International Association had originally suspended operations from US ports for 30 days, however, major cruise liners proposed to restart their operations after the summer season, while other cruise liners have extended their cruising ban even further.

Worse still, a number of passengers and crew tested positive to COVID-19. One of the worst outbreaks of the virus onboard a cruise liner was that on the Diamond Princess, whereby the ship was placed under quarantine as soon as a passenger who had disembarked from the ship tested positive for the virus. The Diamond Princess was placed under lockdown with passengers confined to their cabins for a minimum of 2 weeks. It was reported that a total of over 700 people were infected and resulted in 13 fatalities.

In accordance with Port Notice 5 of 2020, Transport Malta has imposed a temporary indefinite ban on the entry of cruise liners and passenger ships into Maltese ports and territorial waters. By virtue of Legal Notice 92 of 2020, the Superintendent of Public Health extended the existing travel ban on persons to and from Malta whether by air or by sea. However, for obvious reasons this ban has not been imposed over cargo flights, ferry flights, humanitarian flights, repatriation flights and cargo ships, container ships and ro-ro vessels carrying goods and essential commodities and tankers loaded with essential fuels.

Cruise liners may suffer a long term hit following the end of the pandemic as it may undermine people’s confidence in going on cruise liners in the future as travellers may remain fearful of staying in a confined space. Cruise liner companies might therefore have to implement extra measures to win back the confidence of passengers which will require heavy investment at a time in which the industry is already struggling and will prove to be one of the most testing challenges the cruise liners will face.

 

The local scene:  Transport Malta’s response to COVID-19 

Transport Malta published a suggestive list of preventive measures which could be adopted by ship operators with the scope of minimising the spread of the novel coronavirus outbreak, such as ensuring all crew are fully aware of how the virus may be spread. Furthermore, ship agents, operators and masters of the ship are obliged, in terms of International Health Regulations, to immediately report any symptoms of the virus to the next port of call Port Health Medic doctor if there is a suspected COVID-19 diagnosis to ensure the safety of all crew until the potential patient is seen to by a medical professional. Transport Malta has advised that strict hygiene on board vessels should be followed at all times. However, since the crew of vessels live in close quarters to each other, stronger measures were needed since social distancing is a harder task to achieve.

In accordance with Port Notice 6 of 2020, crew members are not allowed to disembark from the vessel throughout the duration of its call in Maltese waters and ports. Additionally, shore personnel are only permitted to board vessels if they are in possession of written authorisation from the Port Health Medic. Furthermore, prior to entry in a port, ships are required to provide the Port Health Office with information regarding ports of call of affected countries.

Transport Malta adopted preventive measures in the early stages of the pandemic reaching the Maltese islands in order to minimise the impact of COVID-19 on the maritime industry and in order to ensure an uninterrupted service is provided to the Maltese shipping community under the current exceptional circumstance. With respect to commercial vessel activities, Transport Malta has temporarily extended the expiry of certifications, registrations and permits of commercial vessels, small ships and moorings, including registration of small ships, nautical licenses, certification of commercial vessels, certification of competency and mooring permits provided that the boat owner is in possession of a valid insurance policy. To further assist the shipping industry Transport Malta took the economic measure of deferring the due payment of the respective registration fees and annual tonnage tax by a period of three months from the anniversary with respect to those whereby the anniversary falls on or after 1 April 2020.

In order to better assist the teleworking measures adopted by local companies and to lessen physical contact, Transport Malta have also facilitated its services by introducing online services regarding yacht and boat registration under the Valletta Registry. The online services range from renewal of certification of registry, provisional and permanent registration, transfer of ownership, online payments, and other ancillary services.

Although the world has been facing a reality check through the COVID-19 instigated lockdown, the world remains largely connected through world trade proving the extraordinary strength and tenacity of the maritime industry in sustaining global supply chains in these unprecedented times.  Furthermore, this pandemic may also act as a catalyst to spur further innovation in the maritime sector to undertake thorough amendments to limit their carbon footprint.

 

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Tags: Corona Virus, Covid 19, Shipping

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