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Ship operators feeling effects of coronavirus

Ship owners and operators are feeling the effects of disruption caused by the coronavirus outbreak.

From oil tankers and bulk carriers, to container ships and cruise ships, there are virus-related issues impacting day-to-day operations in some parts of the world.

Bermuda is home to a number of shipping operators, including Frontline, B+H Ocean Carriers, Nordic American Tankers, and DHT Holdings.

Jens Alers, group director of Bernhard Schulte Shipmanagement (Bermuda), which has offices on Par-la-Ville Road, has spoken about the problems and potential issues faced by the maritime sector as a result of the health alert and restrictions now being imposed.

Crude oil prices have fallen 20 per cent from their 2020 peak last month, and that is being attributed to the impact of coronavirus.

Travel restrictions in China and the extended closure of factories, offices and schools in the country where the virus outbreak began, together with suspension of some flights to and from China, has reduced the demand for oil in the country, which is the world's biggest importer of crude.

On the basis that the world's daily oil consumption is about 100 million barrels, and that consumption has been reduced by two million barrels as a result of the virus, “that is a significant factor”, Mr Alers said.

“Not all of this oil moves by sea, but if you were to translate this into seaborne traffic, two million barrels is what one VLCC [very large crude carrier] carries. So every day one load is lost. That's 30 VLCC loads in a month. In a fleet that has about 600 or 650 ships, it is a significant factor.”

Tanker markets entered the year in an optimistic mood, but large oil tanker rates have now fallen swiftly, and the impact of the virus outbreak extends to other parts of the maritime sector.

“Any country that has a possibility of being contacted by something that has just come from China has already taken action,” Mr Alers said.

Certain restrictions have been imposed on ships that have recently departed from China.

“Australia has a directive to put every ship that has come from China into a two-week quarantine,” Mr Alers said.

He pointed out that a bulk carrier travelling directly from China to Australia would likely be at sea for 12 days. Those days at sea will be taken into consideration under regulations imposed by Australia.

Port authorities in the country, which has important trade links with China, will delay pilotage services to vessels that have come directly from China if they have spent less than the required 14 days in self-isolated quarantine, such as being at sea for that length of time.

Mr Alers said: “Millions and millions of tonnes of iron ore and coal move from Australia to China.

“You can imagine what disruption this could cause, because the ships come back empty to pick up more iron ore and coal to take back to China. This whole cycle could be disrupted.”

A report by UK-based Argus Media on Tuesday said shipping queues at a number of Australian ports were lengthening, and there could be problems for energy and mineral shipments from busy ports that use complex schedules to maximise access.

However, among the disruption the possibility of a silver lining exists.

Mr Alers said: “If you take that much capacity out of the market — that you actually have to ‘park it' at an anchorage for two weeks — that could lead to a massive hike in rates.”

Beyond its 14-day quarantine rule, Australia requires mandatory pre-arrival reporting of human health on-board vessels heading into its territorial waters.

The most widespread disruption to shipping is at ports in China, where the switching of ship crews is either forbidden or limited.

“If you are trying to do crew changes in China with other nationalities, forget it,” Mr Alers said. He added: “The Philippines is one of the largest providers of maritime labour on-board ships and has just issued severe restrictions on anyone coming from China.

“So a lot of these day-to-day logistic operations, such as crew changes, are coming to a standstill. Seafarers are being told there is either no plane going, or you are not allowed to go on it anyway.”

Among cruise ship operators, many have suspended operations in Shanghai, while some have imposed restrictions on passengers allowed to board and others have suspended services to certain ports in China.

The International Chamber of Shipping has issued guidance in line with the World Health Organisation, with recommended measures to be taken. It also said that there should be no “unnecessary restrictions of international traffic”.

Yesterday evening the total number of reported cases of coronavirus worldwide was 24,632, of which 24,405 were in mainland China. There had been 494 deaths reported, and 1,029 patients reported to have recovered from the virus.

View a live update map and statistics on the spread of the coronavirus at https://tinyurl.com/uwns6z5

At sea: from oil tankers and bulk carriers, to container ships and cruise ships, there are increasing coronavirus-related issues impacting day-to-day operations in some parts of the world (Photograph by Valentin Schönpos/Pixabay)

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Published February 06, 2020 at 8:00 am (Updated February 06, 2020 at 12:10 am)

Ship operators feeling effects of coronavirus

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