From the desk of Captain Jeffrey Monroe, MM, AMPE
IMPACTS ON SHIPPING CONTINUE WITH CORONAVIRUS OUTBREAKS
Ocean freight ocean carriers and the cruise industry continues to feel the impacts of the spread of Coronavirus-19 (COVID-19). Reports continue to show that the virus is spreading in Europe and South America. Ocean shipping from China has dropped off considerably as have energy imports into China. The cruise industry is also seeing drops in bookings and the long-term financial impacts on vessel operators is still being estimated but is expected to be substantial. Cargo is also significantly affected, Maersk has cancelled some 50 calls on China already. Ocean carriers and cruise lines have issued informational warnings to investors and last weeks stock market drops have also indicated the impacts may persist well past the most acute stages of the outbreak. Several North American ports are reporting volume decreases in both imports and exports for the first quarter of 2020.
Cruise lines in particular are seeing impacts across the globe, even in North American domestic markets. Industry analysts noted rebounds from past pandemics such as SARS in 2003. However, the ultimate outcome of the outbreak remains unknown. How widely will it spread before it starts to subside? If there is a substantial outbreak in North America, will governments be able to respond effectively? These questions and others are causing investor doubt and dampening the stock market. With decreases in stock-linked savings and retirement plans, consumers are becoming cautions about spending on vacations and similar activities.
A bigger issue the ocean carrier and cruise industries are if ships are quarantined or refused entry into ports. Several ports worldwide have turned away or restricted vessel dockings because of confirmed (or even suspected) health issues aboard. China is reporting that they are getting the spread of the disease under control and many nations reporting outbreaks are putting plans in place to address the spread of the disease. If, however, the public does not regain confidence that the Coronavirus has been controlled, logistics downturns and financial impacts could continue into summer. At the very least, some analysts fear it will take the rest of the year to get back to normal activities assuming the disease is controlled in the near future.