As the punch-drunk freight industry battles to come to terms with the fallout from Covid-19, and industry authority believes the longer-term impact is what we should be considering.
Alan Murphy, CEO of consultancy Sea-Intelligence, says the concern is the impact this will have in the longer term in 2020 and possibly beyond, not only on consumer spending but also on the willingness of companies to order goods in the first place – as well as their ability to do so, as there is also a possible financial liquidity problem beginning to appear.
“On the positive side, short term there are two elements helping the carriers. One is the collapse of the oil price which de facto acts as a short-term cash infusion to carriers having bunker surcharges based on oil prices two months ago and paying bargain basement prices for oil today. The other is the discipline the carriers have shown in blanking sailings and avoided dumping freight rates to fill vessels. This means that until now rates have been relatively stable despite the coronavirus impact from China and might well also be through the coming period if we see a new raft of blank sailings.”
If this negative scenario plays out fully, Murphy believes the industry needs to be prepared for the aftermath which will come in the shape of a sharp rebound where we will temporarily see capacity shortages and rocketing freight rates.