Coronavirus problems piling up

Malcolm Latarche

Malcolm Latarche · 09 March 2020


In the context of several thousand deaths, the problems that coronavirus is causing for shipping may appear trivial, but it is fair to say that if events continue on the course taken so far, shipping is in for a much tougher time than it has seen so far.

Shipping and the world has seen the effects of epidemics before with SARS and MERS but even though they were quite recent, the effect was never to the extent with what is happening now. Those two outbreaks were also at a time when shipping and world trade was booming not in the sluggish static situation it has been over recent months.

If the world is looking to WHO for guidance on what to do and when, another international body the OECD has just issued an interim assessment on economic activity. The report highlights the effect of containment measures taken in China, South Korea and Italy among others and says, ‘The adverse consequences of these developments for other countries are significant, including the direct disruption to global supply chains, weaker final demand for imported goods and services, and the wider regional declines in international tourism and business travel. Risk aversion has increased in financial markets, with the US 10-year interest rate falling to a record low and equity prices declining sharply, commodity prices have dropped, and business and consumer confidence have turned down.

Relative to similar episodes in the past, such as the SARS outbreak in 2003, the global economy has become substantially more interconnected, and China plays a far greater role in global output, trade, tourism and commodity markets (Figure 1). This magnifies the economic spillovers to other countries from an adverse shock in China. Even if the peak of the outbreak proves short-lived, with a gradual recovery in output and demand over the next few months, it will still exert a substantial drag on global growth in 2020.

Along with the depressing economic impact, Shipping is beginning to see some distasteful effects of public reaction and opportunism that could affect safety of ships, passengers and crews. No doubt the quarantine detention of the Diamond Princess in Japan has influenced opinion of cruising and although it does appear to remain popular among passengers, authorities and the public in cruise destinations are taking a different view.

Some cruise ships have been asked to skip calls by the authorities especially if the ship is suspected of having cases on board but events took a rather different turn over the weekend on the Indian Ocean island of Reunion.

When the Sun Princess with 2,000 Australian and New Zealander tourists onboard docked in Pointe des Gallets over the weekend, passengers disembarking for tours were apparently met by hostile crowds of protestors shouting abuse and throwing stones at cruise busses and the police who were attempting to control the protests.

The ship reportedly left the island rather than staying overnight after local authorities said they couldn't guarantee the vessel's safety. The Sun Princess is then said to have headed to its next stop Mauritius, where it was later told it was not allowed to dock. The ship had also been refused entry to Madagascar earlier in its voyage.

Another case of a cruise ship’s voyage being disrupted is the AidaAura which was delayed for a day at Haugesund in Norway while two passengers were tested for the disease. The tests proved negative and the ship was permitted to depart.

Elsewhere there has been an unusual case of a ship attempting to deceive port authorities about its previous voyage details. The 1996-built Panama flagged bulker Harmony Six apparently switched off its AIS after leaving a Chinese port bound for the Philippines and then fraudulently claimed to have left the Chinese port ten days earlier than it had so as to appear that the 14 day quarantine period had been spent at sea. The deceit was discovered while the vessel was at port and it has since been detained.

This sort of action could have safety implications for other vessels unable to identify a ship with its AIS switched off, and if practiced on a wider scale will only lead to all ships being treated with greater suspicion by port state authorities leading to potential delays. No doubt if a similar ruse was tried in states such as the US where fraudulent activity is severely punished the result could easily be a massive fine or imprisonment.

Another fraud has also been attempted but this involves the ship being scammed by unscrupulous parties in ports. ITIC (International Transport Intermediaries Club) a P&I organisation for port agents and ship managers issued a circular at the end of last week saying it had received reports of fraudulent invoices being submitted to owners for the provision of medical testing services in relation to the coronavirus.

For such items to be included in disbursement accounts would normally suggest the involvement of the port agent but fake invoices could also be sent directly to the owner or shipmanager in some cases. It would be helpful if any owner or operator could report these activities to teh wider shipping world.

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