COVID-19: Worst Case Scenario Could Bring About USD 23 Bn Loss for Carriers

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*114 cruise ships near US waters

World Maritime News…Blanking of sailings triggered by the demand drop from the coronavirus pandemic could result in a USD 23 billion collective loss for container carriers in the worst-case scenario, Copenhagen-based consultancy Sea-Intelligence predicts.
This scenario is based on the freight rates decline experienced by carriers in 2009 and is being made on the back of a new wave of blank sailings from last week pushing the total to 212.
Multiple services have been affected by cancellations ranging through to the end of June. However, the majority of blank sailings are clustered within the coming 5-6 weeks.
The largest capacity withdrawal is seen in the Asia-Europe trade which is entering a 4-week period with 29-34% of the capacity having been removed from the market.
As Sea Intelligence explains, the aim is to prevent a catastrophic drop in freight rate levels, while trying to cut costs at the same time.
“In the most benign scenario, the carriers experience a 10% volume decline in 2020 due to the pandemic but manage to prevent any material decline in freight rates. In this case, their profits will decline by USD 6 Billion compared to 2019 and cause all main carriers combined to lose USD 0.8 billion in 2020,” Alan Murphy, CEO of Sea-Intelligence said.
The economic impact of the push to adapt to the demand drop is yet to be seen as things develop.
“Hence the development in freight rates will be important in the coming weeks, as that will determine the degree to which we will see even more aggressive capacity reductions,” Murphy adds….reports World Maritime News..
Meanwhile, a total of 114 cruise ships, carrying 93,000 crew members, are currently in or near US ports and waters.

According to the US Coast Guard, 73 cruise vessels, with 52,000 crew on board, are moored or anchored in US ports and anchorages.
Another 41 cruise ships, with 41,000 crew members, are underway and still in the vicinity of the United States.
Some ships have been docked at their homeports for weeks but many of them remain anchored far away from ports, in the open seas. There are still operating cruise ships with passengers onboard, struggling to find open ports to disembark. Those vessels that succeeded in bringing passengers home can now struggle in finding a safe anchorage due to a shortage of berthing locations.
Radar satellite image acquired by Finnish and Polish microsatellite manufacturer Iceye Oy on March 21, 2020, showed multiple vessels from several cruise lines anchored in the North Atlantic Ocean.
Since March 7, when COVID-19 cases on cruise ships operating around the US escalated, the coast guard conducted 31 life-saving medevacs.
Most of the cruise line industry voluntarily suspended cruise ship operations from US ports of call on March 13, and the country’s Centers for Disease Control and Prevention (CDC) issued a “no sail” order on March 14 to all cruise ships that had not voluntarily suspended operations.
According to the coast guard, the drawdown of passenger operations is a major milestone, but it does not eliminate US government concerns for cruise ships and their crews.
“We commend the decision by the cruise industry to cease operations. However, pausing a global tourist industry does not happen instantaneously or easily,” Vice Admiral Dan Abel, Coast Guard Deputy Commandant for Operations, commented.
“The federal, state, local and industry cooperation to achieve this feat truly represents the whole-of-nation approach directed by the president and is essential to fighting the spread of this virus and working to minimize the loss of life.”
On April 3, the cruise ships Zaandam and Rotterdam offloaded more than 1,200 passengers in Port Everglades, Florida. The coronavirus-hit Zaandam, accompanied by its sister ship Rotterdam arrived in Florida after weeks spent offshore, trying to find a port to disembark.
These developments, combined with one remaining disembarkation being coordinated, represents the processing of more than 120 vessels in the last three weeks to remove 250,000 passengers from cruise ships due to the COVID-19 pandemic.
The coast guard, under guidance from CDC and working with Department of Homeland Security partners Customs and Border Protection (CBP) and the Transportation Security Administration (TSA), as well as state and local entities from multiple port jurisdictions, facilitated the safe landing, screening, quarantine and repatriation of these passengers in a manner that has prevented further spread of the COVID-19 virus. Many passengers were brought to safe harbor in the United States when international ports refused entry.
“The cruise industry has an ongoing obligation for the care, safety and welfare of their seafarers,” the USCG pointed out…reports World Maritime News.