BusinessWorld

Impact of COVID on Shipping Industry

The maritime industry has been damaged both directly and indirectly by the outbreak of COVID-19, which is at the forefront of trade and relies on travel and human interaction. The operations of shipping businesses and related industries, such as terminals and ports, have been affected due to staff being instructed not to travel or report to work. Lower demand for goods and raw materials and the resulting necessity for shipment have lowered freight rates. Several shipping businesses have begun to issue warning statements regarding diminished earnings visibility and dismal future earnings results.

The following are some of the issues that the maritime and shipping industries faced during COVID-19.

Port Closures

The shutdown of ports during the quarantine period was a huge obstacle, as it prevented the virus from spreading further among the workers. In addition, some governments have implemented transit bans on vessels bound for COVID-19 countries of concern.

The vessels mentioned above were compelled to be on the water and not travel to their target ports due to the ban. As a result, some nations chose to ban or restrict the vessels’ entry, resulting in massive disarray among various shipping corporations worldwide. The stifling of specific operations has a significant financial impact on the impacted shipping companies.

As a result of the halting/delay in cargo shipping during quarantine, port capacity has been reduced, and storage facilities have become overcrowded.

Less Demand for Cargos

Every country’s competent health authorities are avoiding the possibility of COVID-19 spreading, which has resulted in a drop in product and goods import and export between countries. All such items that could previously be transported easily by ship or other marine vehicles must now adhere to a set of rules and procedures, which has reduced demand for such cargo.

Bankruptcy

Many small marine and shipping enterprises have gone bankrupt due to lower demand and an inability to manage the company’s finances during this period of lower cargo and shipping demand. This has had a significant impact on small enterprises and has resulted in the closure of several companies in the industry.

Effect on Chinese Shipping Industry

Congestion at other major Chinese ports is worsening due to the partial closure of the world’s third-busiest cargo port. Container exports from Chinese ports have been seriously affected due to the shutdown of operations in China’s ports, which were short-staffed and unable to receive and forward containers inland. In terms of port operations and staffing, the port of Hong Kong was less disturbed at the time, and volumes increased.

Last month, authorities in Guangdong, China’s southernmost province and home to some of the world’s busiest container ports, grounded flights, shut downtowns, and halted trade along its coastline in an attempt to manage a sudden rise in Covid-19 cases.

Backlog of Ships in China:

However, the damage has already been done. Every day, 36,000 20-foot containers are filled in Yantian, a port about 50 miles north of Hong Kong. After diseases were discovered among dock employees, it was shut down for over a week late last month. While the port has reopened, it is still functioning at a fraction of its capacity, resulting in a massive backlog of containers and ships waiting to dock.

Yantian’s backlog has spread to Guangdong’s other container ports, including Shekou, Chiwan, and Nansha. They were all at Shenzhen or Guangzhou, the fourth and fifth largest comprehensive container ports, respectively. The global shipping industry is facing a tremendous challenge as a result of the domino effect.

Ship Being Loaded

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *