Shipping was supposed to have a fairly average year prior to the pandemic of COVID-19. Nowadays, it’s “every man for himself”, a fight for survival for the majority of owners. So, the faster a recovery in global demand and trade can be achieved, the better for shipping as well. In its latest weekly report, ship broker Allied Ship brooking said that “it has been a week of announcements with regards to the different stimulus packages that will be rolling out around the world as counter measures to the issues and economic disruptions caused to major economies. For the moment it seems as though the consensus is that most of what has been announced is too little to provide any significant punch and really measure up as a serious counterbalance to the downward pressure that is prevailing. Given the overwhelming evidence of the severity of the impact this pandemic has had on major economies, many are calling for governments and politicians to step up their game”.
According to Allied’s George Lazaridis, Head of Research & Valuations, “with more than 40 million Americans having filed for jobless benefits (another 2.1 million filed initial unemployment claims last week) since the start of the pandemic, the real unemployment rate has risen to its highest level since the Great Depression of the 1930’s. At the same time, we have seen equally pessimistic signs emerging from other major economies such as Europe and China. All this brings for a considerable re-visiting of the expectations held for the months ahead as well as for what the overall damage will be for 2020 as a whole”.
Lazaridis added that “beyond this however, global trade is equally under threat. With the year looking likely to erase all the gains made in global output over the previous 2 years, total world trade in goods and services could scale back by as much as 15%, while it is looking ever more likely that we will be able to see all of these losses recuperated in 2021. If this was to be the case, it would mean that under such a scenario it could take more than 2 years for us to reach the market conditions we were seeing at the very start of the year. All this however is still at too early a stage to fully quantify and say with any level of certainty. For the time being it looks as though that beyond some continued disruptions being faced in global trade and shipment operations, we have been seeing a strong come back by several traders which have been looking at the market with a keen eye to recover the lost ground of the past 3 months. We have already started to see a gradual increase in trade flow volumes of iron ore and coal into China, something that has also started to be reflected in the spot price of both these commodities” he said.
“Nevertheless, given that we are still in the process of a gradual phase out of all the restrictions that were put in place across the globe as part of the effort to combat the pandemic, the overall balance being noted in shipping markets is still a negative one, with overall freight rates in the dry bulk space still under pressure. This imbalance is still expected to further subside over the coming months, while even possibly swinging the pendulum in the opposite direction during parts of the summer period. Given though the level of accrued damages that seem to have been raked up during the peak of the outbreak, it has become increasingly hard to see how we could return back to any sort of normality. Going back to the start of the discussion, this is where the stimulus measures undertaken really play a key role. All outcomes largely depend on key decisions that policy makers will make right now. A lot has already been announced so far with most of the figures being thrown around sounding fairly impressive. When you put them down however against what has been lost and look more closely as to where the focus is, it is like policy makers have brought a car battery and some cables in place of a defibrillator in order to resuscitate the patient (the consumer). It might just work, but the true odds are stacked up against it”, Allied’s analyst concluded.
Hellenic Shipping News Worldwide
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