Impact on the Maritime Industry
The outbreak of the covid-19 has been increasingly causing a major impact on the communities, lives of people, and their families. The entities across the world are going through the difficult times because they were unprepared to face such pandemic. It is becoming difficult to get the information regarding the virus and its impact on the international business activity, because of its changing scale. In such difficult period, an ability of the shipping services to remain sustained to transport food, medical supplies, and energy all across the different parts of the world, will play a key role in getting over this disastrous pandemic. Shipping signifies an entrance to the world’s economy, and is a lifeline for the economic and social development (Stopford 2009). The continuing and likely contraction of the consumption and production because of the covid-19 crisis, has led to the reduction in the maritime time, lessening demand of shipping, port traffic, and overall turnover (Xu et al. 2021). Hence, the main purpose of this paper is to discuss and analyze the impact of the covid 19 on a shipping company’s operations.
The global transmission of the covid-19 has resulted in the difficult and stressful situations all across the world, which ranges from affecting day-to-day routines to increased number of deaths of people and huge influence on all nations’ economy. One of the most affected industry due to the destructive pandemic is the shipping and maritime industry. The operations of shipping companies have severely been impacted by the covid-19. This pandemic increased the issues for entities operating at sea because of the restrictions imposed by the governments on their borders and port entry (Notteboom, Pallis and Rodrigue 2021).
It is quite unfortunate that the global outbreak has increased the challenges for the export and import trade, which gradually increased from not only the ports of China, but also the other ports of the world. Even some nations took decision to close certain ports, so as to prevent likely spread of the disease. Because of the urgency of the situation, various nations ban entry of the specific vessels, particularly those originated from the country- China. There were various disputes that arose between the owners and charters relating to the hire period of vessels, discussion of clauses, and laytime. Further, various shipping entities experienced bankruptcy, which left a significant number of the people unemployed (Carballo Piñeiro, Mejia and Ballini 2021).
For restricting the likelihood of virus spread, the governments of different nations, restricted the import and export trade. During the outbreak of the covid-19, the perishable goods’ transportation required to go through a particular process, and also meet with the specific set of the rules. This led to reduction in the demand of cargo, particularly, carrying of perishable goods become impossible, due to the increased waiting time or increased period of time specified by each nation’s responsible authorities. The disputes among the owners and charters increased due to the significant loss of the time and money. These disputes mainly relate to the hire period of the vessels, as charter was allowed to the particular vessel for the restricted interval of time (Boviatsis and Daniil 2022). Nevertheless, the unforeseen condition of the crisis, the unavoidable causality, and the increased quarantine period prevented the completion of contract as initially agreed. As a consequence of which, the agreement of hire period exceeded in number of cases all across the globe (Wong 2021).
Impact on Export and Import Trade
The key aspect taken into consideration was the discussion regarding clauses between the parties. As per the provided directives and guidelines, a clause relating to the infectious disease were included by most of the shipping companies and their owners. Even though it led to the dispute among the ship-owners and the charters, as both would intend to include the clauses, which would be safe or advantageous for themselves. As a consequence of which, the agreements’ duration between the parties could considerably be extended, or even resulted in an overall disruption of their entities. Further, it is quite unfortunate that the smaller entities involved in the shipping and maritime industry has faced insolvency, as a direct outcome of the reduced demand for the cargos and the overall failure to manage the financing issues of the entity, during the period of pandemic (Firm, 2020).
Because of the continued lockdown and restrictions in majority of the nations, various warehouses have been completely closes, and hence, some manufacturers and retailers have refrained to pickup the containers and cargo, which cause considerable port congestion. Some who continued open the ports at the time of the covid-19 situation, have lessened their number of staffs. It worsens congestion and have disrupted exports and imports, and the supply chain. Further, the crew change crisis is also among the most key challenges faced by the shipping industry due to the covid-19 crisis. The continuing ship operators’ inability to conduct change in crew has been the major operational challenge that confronted the world’s shipping industry after the Second World War (Sackey et al. 2021). Because of the restrictions by the immigration and national health authorities, and suspension of the major international flights, around twenty five percent of the regular changes in crew occurred during March to August 2020. It is because of the restrictions in travel, seafarers did not travel foreign to embark on the ships, which made changes in crew more difficult or quite impossible in some of the cases (Stannard 2020).
Some legal issues are also expected to occur, since nations are now recovering from the covid-19 effects. Prior of vessel taking on the cargo, the health authorities and the shipping authorities make sure that it follows the safety measures and requires clearance. It results in causing delays, which falls on the owner of the ship. The overall effects of the disruptive events will cause huge losses. Further, there has also a huge impact of the covid-19 on the cruise companies, as such companies’ operations got suspended for more than sixty days. This suspension is proving quite costly for the companies and the overall industry (Adv-polymer.com. 2022).
As per (Leptos-Bourgi 2019), the covid-19 effects must be specifically discussed on board, and some important parameters need to be considered. The crew members’ safety onboard must be enabled. The staff should be highly cautious to prevent the virus transmission on board, as vessel might sometimes be in the geographic areas where any medical help would be delayed or restricted. The disembarkation and embarkation of the crew really matters. At the chaotic and difficult phase, various crew members were not able to write the repatriation letter due to the strict isolation period or because of the other safety issues that arose. Further, some restrictive travelling measures could help in preventing some of the people from joining the vessel. It could have severe consequences due to the fact that the long contracts may result in causing burnout, fatigue, or depression to the seafarers (Li, Zhou and Yuen 2022).
Disputes among Owners and Charters
Consequently, the crew member’s productivity and motivation would considerably be reduced, which cause significant negative effects on the vessel’s safe operation. Moreover, the seafarers who intended but were not able to commence the vessel, may be found facing financial issues, as without being employed, they too long stayed onshore. There was considerable reduction in the overall supplies provided. Hence, the shipping entities faced problems not only in collecting the medical supplies, but they also faced problems in collecting the mechanical or electronic parts (Kumar and Mishra 2020). In addition, the inspections onboard were also highly affected. At different ports, the inspectors and the other qualified employees had faced restricted access to vessels. Therefore, the legally required inspections relating to the training, environment, safety, and others, may not occur. There was significant reduction in the onshore support, as the officers of shipping entities, and the port authorities were either functioning distantly or they were just with the emergency personnel. This led to the vessels more expected to face delays or likely to get onshore assistance of the lower quality (Leptos-Bourgi 2019).
As an outcome of which, different regional or national authorities have published the guidelines, for coping up with the most challenging condition of the outbreak of the covid-19. The governments across the different countries prescribed the guidelines to create various precautionary measures against the global spread of the covid-19 virus. These guidelines have shown the required measures and methods that should be implemented by the vessels on a serious note. Its purpose was mainly to lessen the adverse consequences and effects of the covid-19 crisis, and to ensure safety means of the transport and users (Assaad and El-adaway 2021).
The emergence of the covid-19 has shown that the weaknesses of the shipping industry and the companies in facing the crisis. Hence, it is important for the companies to get ready to face such crises, because such crises may take place in the future, which may be with great intensity. It is therefore, recommended that the shipping entities will require to become adaptable and agile to the changing condition, and also focus on creating the effective response and strategies. It is also recommended to the companies to think about the digital disruption. Reliance on the technology and digital disruption, will help in creating much more sustainable and a robust shipping industry. The covid-19 pandemic has highlighted the significance of technology in the shipping industry. The national and international policymakers can help in adopting the new technologies (Jasmine, Guan and Shuyi 2020). The partnership is important to find out the viable technological solutions, which can help in making a difference. The technology will play an extensive role in addressing the issues, which are faced by the shipping companies, but just having technological innovation is not enough. For seizing the complete value of the technology, it is equally important that the transportation leaders and government come togethers so as to create the required condition, provide the correct incentives, and support an exchange of the new information on global scale (Adv-polymer.com. 2022).
Conclusion
Therefore, it can be concluded that the shipping industry has been highly impacted by the covid-19 outbreak. There have been significant implications due to the increased government restrictions, volatile trade volumes, and continued constraints on the capacity. The shipping companies have experience huge losses, and some of the smaller shipping entities become bankrupt because they were unable to bear the losses and increased burden of dent. However, the government has taken some measures to assist the shipping industry. Hence, it can be said that the shipping industry requires to be resilient against such pandemic. This pandemic has insisted the industry and companies to rethink their risk management approach, so to be agile and adaptive to change, and face any such crises in the future.
Reference
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