Seaborne trade to crash to 35-year low amid COVID-19 pandemic

With the coronavirus pandemic, global seaborne trade, which stands at around 12 billion metric tonnes (MT), will contract by 600 million MT this year, the biggest fall in more than 35 years, going by the latest report from a leading shipbroker, Clarkson Plc.

The firm forecasts that the overall trade of goods moved on ships will shrink 5.1 per cent in 2020 from last year, compared with a 4.1 per cent yearly decline during the 2008-09 financial crisis.

However COVID-19 restrictions have cut investment in shipbuilding to its lowest level in 11 years in the first quarter (Q1) 2020.

Clarkson, in its World Shipyard Monitor report, stated: “Contracting activity was extremely limited in the first quarter of 2020, with the economic impact of the Covid-19 outbreak negatively affecting investor sentiment.”

It noted that 100 vessels of all types were ordered in the first three months of 2020 at $5.5billion, a 71 per cent decline from Q1 2019, and the lowest total since Q2 2009.

According to the report, Chinese yards got 55 orders in the quarter, and South Korean yards got 13 orders, representing falls of 50% and 81%, respectively. Work at Asian shipyards is nearly halted with owners holding back on orders as global demand for goods nosedived.

The firm expects orders to keep sliding as a global downturn in trade deepens, and that the number of overall orders would decline by 26 per cent this year.

“The continued escalation of the coronavirus outbreak is likely to have a severe impact on newbuild order potential in 2020,” Clarkson said.

Besides, the falling orders also affected every type of ship, from container vessels that move the world’s manufactured goods to high-margin natural-gas carriers, where South Korean and Chinese yards had pinned their hopes for growth this year.

Orders for dry-bulk carriers and tankers are also drying up even though China is resuming commodity imports, and energy traders are booking tankers to store oil on the back of the crude-price collapse.

The trade lapse will directly hit the Korean and Chinese yards that control around half of the global shipbuilding capacity, according to marine data provider VesselsValue.