The global shipping industry is expected to see its biggest drop in 35 years.

2020-04-27 09:00

The novel coronavirus pandemic has severely impacted global maritime trade, with warehouses around the world overflowing with consumer goods such as refrigerators and washing machines. Retailers are asking shipping companies to delay deliveries, which could cause global container shipping to decline by as much as 30% in the coming months.

Steve Gordon, global head of Clarkson Research, recently stated that as the global economic impact deepens, Clarkson's latest forecast predicts that maritime trade may contract by 5% in 2020, the largest decline in the past 35 years. Clarkson predicts that this year's maritime trade may decline on a scale unseen since the catastrophic recession of the mid-1980s.

Esben Poulsson, chairman of the International Chamber of Shipping (ICS), also predicts that global container shipping volume could fall by a further 30% in the coming months. He stated that shipments have fallen by about 15% so far this year, and the decline in the second quarter will depend on the extent to which governments reopen the economy. Currently, inventories of goods such as clothing, textiles, and large household appliances are full, and buyers are asking shipping companies if they can "temporarily store these goods" or slow down the ships and extend delivery times.

Jeremy Nixon, CEO of ONE, Japan's largest container shipping company, pointed out that forward bookings for cargo from Asia to North America and Europe have slowed from April to May. However, shipments of products from North America, South America, Europe, Oceania, and Asia remain strong. To cope with the decrease in Asian exports, ONE has reduced its regular routes from Asia to Northern Europe, the Mediterranean, and North America.

Despite this, Clarkson still believes that there is potential for market recovery in the second half of 2020. As the epidemic is gradually brought under control, economic stimulus measures may boost some industries, leading to a rebound.

Clarkson compared the current market situation to that during the financial crisis, believing that compared to the months following the collapse of Lehman Brothers in 2008, the initial impact on the shipping industry may be significantly deeper, but the rebound will be greater.

Clarkson points out that current outstanding orders account for only 10% of the global fleet, compared to 50% in 2008. The trade growth rate was low before the outbreak, and banks are in a good capital position. Therefore, Clarkson predicts that the market rebound this time may be faster and more dramatic than after the 2008 financial crisis.

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