covid-19 pandemic

Blurry Vision for '20/20'

20/20 may translate to perfect vision in optometry but it is surely not the same in the global economy, which continues to be severely impacted by the COVID-19 pandemic from the onset of year 2020. The global marine industry was one of the hardest hit. As the shipping sector struggles to maintain operations under extremely challenging circumstances, the shiprepair industry certainly felt the agonizing ripple effect, not to mention its own difficulties in terms of labour, contracts, logistics and capacity, to mention a few.

Shiprepair yards around the world enjoyed a booming 2019, with a gush of BWMS and Scrubber retrofit orders. At the end of the year, everyone anticipated an increase in demand in 2020, not only for retrofit projects but for maintenance and repair works as well. Little did we know that an invisible foe will upset the celebration completely.

The shiprepair industry has faced an unprecedented situation with COVID-19. When China announced the increasing number of positive cases before the Lunar New Year, not only did we see a drop in enquiries and orders for Chinese yards, but also an increase in cancellations, with Shipowners opting to move the repairs to the Middle East or Mediterranean. However, it did not take long before the coronavirus crept into the rest of the world, thereby affecting the rest of the shiprepair hubs. Worse, the uncertainty dragged longer than expected.

COVID-19 has put the world to a standstill in the last few months. Oversea shipment decline and cancellation of charters resulted in shipping companies struggling to maintain operations. The downswing in shipping business volume consequentially affected the shiprepair business. Some companies even faced serious liquidity problems.

Yards were forced to operate at reduced capacity as the number of orders declined, manpower reduced and movements restricted. Yard operations were restricted to critical and essential services. In Singapore, labour force in all yards has been badly hit as migrant workers' dormitories become significant clusters of COVID-19 infections.

During the peak of the outbreak, borders closed and most countries implemented travels restrictions. Delivery of spares and equipment were greatly affected by the ramifications of transport restrictions. Port regulatory requirements such as vessel quarantine and ship crew quarantine also disadvantaged the shipyards. Scheduled dockings had to be cancelled or postponed and many yards had to declare force majeure for projects already in the yards. Yards had to re-negotiate terms of contracts due to delays and additional costs incurred while some Owners had to negotiate with the yards as they are unable to take delivery of the vessels despite the work being completed. Recognising the challenges that shipping companies are facing, extension of survey windows was granted. As another alternation, classification societies also introduced remote survey programmes for qualified vessels. Some ships, therefore, no longer need to be docked.

Some analysts estimated around 70% of the global dockings have been impacted.

Today, though many countries have relaxed or lifted the travel restrictions in order to save their economy, COVID-19 is far from over with more than 9.9 million cases reported globally, and more than 100,000 positive cases added daily.

While dockings have resumed in most parts of the world and we are witnessing a return in docking enquiries for our represented shipyards, remote supervision is the new norm with Superintendents and Managers attending daily shipyard meetings via video conferencing and hiring local engineers to supervise the projects to avoid travelling where possible. Despite the uncertainties, many initiatives has been taken by various stakeholders to undertake project management remotely and improve communications for routine shiprepairs so that vessels can continue to operate in optimal conditions while ensuring the safety and well being of their staff.

Nobody knows how long it will take for normality to return... but let us continue to keep our spirits high and await the light at the end of the tunnel...

/CowayMarine June2020