Due to the increase of health regulations and lockdowns caused by Covid-19, global GDP has fell to 3.3% across 2020 caused by the peak of Covid-19 disruption to seaborne trade.
While the whole word is impacted, some of the top regions affected by Covid-19 are India and the Eurozone. India was the most affected country due to the initial countrywide lockdown in late March 2020 and the speed of the Covid-19 spread within the country.
As for Europe, the top 5 countries affected included Germany, Italy, Spain, UK and France where port calls for Deep Sea cargo vessels went down by -8.7% in 2020 as compared to 2019. In general, global port calls of Deep Sea cargo vessels are down by -0.5% as compared to the previous year in 2019. In comparison to the global GDP, Europe’s economy suffered negatively due to the region’s Covid-19 spread and increased restrictions.
The easing of Covid-19 restrictions and rollout of vaccines are expected to help pick up the global economic activity in 2021. However, the OECD (Organisation for Economic Cooperation and Development) mentioned it will take three years until many of Europe’s economies fully recover to pre-pandemic levels.
Tankers vs Covid-19
The tanker market is the top shipping market affected by Covid-19. Together with the implementation of green energy transformation and OPEC supply agreement, tankers suffered the most repercussion. Sharing more on the topic, Philip Clausius, Founder & Managing Partner, Transport Capital, commented: “Tankers supply energy/power, heating and transportation fuel. The demand for transportation fuels was hit the hardest because air traffic was dramatically reduced (even if now it’s starting to resume) and people were driving far less during the peak of the pandemic.”
During the onset of Covid-19 in April, there was a historic supply cut agreement by OPEC to take effect in May which took the first drop in Brent Crude Front Month Futures.
In late April, lack of storage at Cushing had affected oil prices to hit a negative – causing a further drop in Brent Crude Month Futures. When supply cuts took place, there was a gradual improvement in oil demand as lockdowns ease between May to October of 2020.
On one hand, successful vaccination trials and demands are expected to return to pre-pandemic levels and the tanker market will be recovering fast. On the other hand, the new Covid-19 variants and potential changes in consumer habits show that the outlook continues to be uncertain.
Top 3 Products Affected
As a consequence of the tanker market being affected, the top 3 products that are affected in the shipping market are Oil products, Coal and Crude Oil. Oil products fell to -9.6% due to decreased demand for oil followed by coal which suffered a drop of -9.4% due to decreased demand for electricity and acceleration of green energy transition. Lastly, crude oil has fallen to -6.6% due to OPEC supply cut and a fall in global oil demand.
What About Other Shipping Industries?
Another shipping market that has been affected greatly by Covid-19 is the Car Carriers industry. More on this, Philip highlighted: “Many car manufacturing plants were closed in Q2 last year and even stretching into Q3 because of the infection risk to the plant workers.”
“During Q2/3 last year many car carriers were laid up waiting to car traffic to resume. That market has very strongly rebounded by now,” he added.
Image Source: Photo by zhao chen on Unsplash
