2020 for shippers has become the year of new rules to start the work and at the same the strengths test in terms of the new factor named “coronavirus”. APK-Inform Agency discussed trends on the market of marine shipping with the General Director of MAERSK Ukraine, Roman Koloyanov.
— Roman, what are the main trends on the market of marine shipping this year?
As you know, the year 2020 has made new rules for shipping all over the world, which is connected with the new requirements entering into force that restrict the sulfur emissions. This became kind of a challenge for the industry, because the market participants had to search the solutions to meet these requirements. One chose to reequip the ships, but most of the ship owners have chosen to transfer to more expansive light-sulphurous fuel. As a result, the beginning of the year was marked by the chaos on the market of bunker fuel, because the demand on the light fuel increased significantly, but its availability is geographically uneven. By February 2020, the situation has resolved and at that time there was another challenge connected with the situation in China.
— How have the shipping market reacted on the coronavirus factor, taking into account the situation in the Chinese ports?
The situation in China has a severe impact on the market of shipments, because China is the second economy in the world, and at the same time the largest industrial center. Due to the closure of production, the demand on the global raw material market declined drastically, which by itself stops the shipment of bulk goods.
On the market of raw materials shipments, we can see a steep downfall of the freight levels, because the significant part of the fleet was left without contracts. The container market is more connected with the shipment of the finished products, and in February we could seed that there was no common renewal of the demand on the shipments from China after the Chinese New Year holidays, but at the moment there is a renewal of the shipment volumes.
It is still early to say about the consequences of the current situation with coronavirus, as the global economy faced such phenomenon at first time, but it apparently will bring some changes in the global trade, which without doubt will influence the shippers, because our goal is to provide the global trade.
— How have ship owners reacted on this situation?
Each chooses the resolution individually. If we speak about the container business, we can see cancelation of the ship entry from China as a reaction to the decline of the exports. If we speak about the safety standards, there are different measures taken — such as restrictions to leave the vessel for nearly 14 days (as a quarantine) after the exit from the Chinese port.
— If we look at sea shipping of agricommodities, how do the new unexpected global factors influence this sector?
The global economy is very open and interconnected. Of course, exporters of grains have felt some pressure on the demand, because China is the largest importer of agriproducts, but there is also an influence of the logistics costs on the bulk shipments. As I have said earlier, the prices of bulk shipments declined, but it is a rather temporary issue, because as soon as Chine recovers, the demand on the market will grow.
Speaking of the container logistics, for the European agriexporters the upcoming period will not be easy, and it is connected with cancelation of the ship movements from China in February, which means that these ships will be absent in Europe. In Ukraine, this situation is expected in the second half of March, and it will last at least for a month.
— Has Your company faced the problems in the seaports with loading and unloading of goods in the countries with coronavirus? How fast have You solved such problems?
As far as I know, we did not have such problems. At least, I haven’t heard of it.
— What can be the economic consequences of coronavirus on the market of marine shipment?
I don’t have the information about the consequences for the industry in general, but according to expert estimations, in the FQ of the current year the shipment volumes to China will become 6 mln TEU less than expected. This number is huge even in the global scope.
— Apart from coronavirus, there are other factors, more influential for the marine shipping market and freight rates. Which one have the strongest effect on food products and agriproducts shipment today?
The increase of the fuel costs is the important factor, and I’ve mentioned it earlier, because the transporters have to compensate it by means of increasing of the freight rates. And the seasonal fluctuation is the second factor. As agrarians have the seasonality connected to the field works, such seasonality exists in trade of agriproducts, which generates the season of the demand on the marine shipments.
In the Azov and Black Sea region in particular, taking into account its specific features, which also has the inner-regional competition, those win who find the most effective logistics decisions, which in the end form the demand on marine shipment, which is the last chain of the exports.
But if we look at the container logistics, today the imports set the rules, which severely restricts the possibilities of exporters, especially during the high season.
Roman Koloyanov will share more detailed information about the trends in marine shipment and the global logistical chains of grain trade, during his speech at the conference Grain&Maritime Days in Odessa 2020, to be held in Odessa (in the hotel Black Sea, Shevchenko Park), on May 27-29.