Winds of Change: Can the shipping markets recover from the coronavirus chaos?
Where next for shipping markets? Naturally there are different drivers depending on the commodity and vessel type, but one common theme emerges: cautious optimism that the rest of the year could see an upturn in economic activity after the dramatic slowdown prompted by the COVID-19 pandemic over the past few months. This is, however, tempered by fears of a second wave of infections which could lead to renewed tightening of lockdowns and deepening economic malaise.
For tankers, there is the added complication of the peculiarities of the oil market. Earlier this year, plummeting oil prices paradoxically benefited dirty and clean tanker owners as hire rates soared due to a spike in demand for floating storage given the exhaustion of storage capacity on land. Assuming this situation continues to unwind, more spot tonnage is set to become available in the coming months, potentially pressuring freight rates.
Dry bulk remains subject to seasonality, with many Kamsarmax, Panamax and Supramax owners all pinning their hopes on strong grains export seasons from the US Gulf and the Black Sea during the remainder of 2020. In addition, those Supramax owners involved in the steel and iron ore trades will continue to keep a particularly close eye on economic developments in China and its key export markets, which remain uncertain.
Container shipping, the sector arguably most directly linked to levels of consumer confidence and spending, has seen some signs of recovery but confidence remains shaky. Meanwhile LNG rates plummeted in the first half of 2020 and all eyes will be on the demand for US cargoes over the rest of the year.
Aside from fluctuating freight rates, the additional logistical challenges of a global pandemic should not be forgotten. As infections spread, rules to do with quarantining vessels and limiting crew changes were implemented at various times and varied from port to port, region to region. This represented a new challenge for market participants and, in particular, for seafarers. While many of us have been required to stay at home, spare a thought for those onboard ships who have not had that option.