European shipping is facing a critical moment in the face of the current COVID-19 pandemic. Shipping companies, charterers, operators, shipowners, crew as well as onshore staff are all dealing with mounting difficulties in continuing their operations. To better understand the economic impact of the pandemic on the industry and to assess the impact of EU and national measures put in place to alleviate the situation, shipowners body ECSA (European Community Shipowners Association) conducted a survey in April 2020 among its members’ companies.
With the exception of tankers, all other segments reported significant immediate losses. The worst-hit segments are ferries, cruises, car carriers and offshore service vessels.
The turnover decrease reached higher than 60%. Respondents signalled that some recovery is expected in the rest of the year compared to the immediate economic impact, however turnover losses remain significant throughout the industry – except for the tanker sector.
The employment of seafarers and office personnel follows very similar patterns with a sharp decrease of seafarers in the most impacted segments and less so for office personnel. While companies are able to tap into national schemes for their onshore staff, the national schemes for seafarers apply only to nationals, leaving out other nationalities.
One of the less reassuring results that emerged from the report is the lack of national, regional or local measures put in place against liquidity issues or that these are not applicable to the shipping industry. In the case where measures exist, banks do not offer those options in practice; and when they do, the administrative burden and costs outperform the benefits.
A worrying trend is that the hardest-hit segments most in need of financial assistance are the ones not receiving them.
With such a heavy toll on financing and employment, the industry does not expect a full return to pre-crisis level of activities in the course of 2020.
While more than half of the companies that responded maintain a positive outlook on returning to pre-crisis level of employment, planned investments will either have to be cancelled or put on hold. This is certainly the case for investments in the reduction of air emissions: only 26% think they are able to go ahead as planned, 30% would proceed at a lesser extent, while 44% are no longer able to make such investments.
This is a major setback for the industry, which is fully aligned with the IMO’s 2050 CO2 reduction targets and has since the new European Commission took office been supportive of the EU’s ambition to be the world’s first carbon-neutral continent.
The full survey can be downloaded from the ECSA website.