Covid-19 Market Update

by Rivertrace

As a stakeholder in the Society of Maritime and Maritime UK trade bodies, Rivertrace work closely with the Department for International Trade and would like to share with our customers an update on the maritime market during Covid-19 from John Strang, Marine Engineering Sector Manager, Department for International Trade.

Dept. for International Trade – Maritime Update April 2020

During the Covid crisis the DIT Maritime team continues to work with companies in a range of export markets which are still active such as China, S Korea and Singapore .

Download the guide to oil in water monitoring & discharge

At the same time, we are engaging with key account managed companies, stakeholders and industry groups to learn how they are responding to Covid 19, to get their views on the government’s business support measures and to discuss how we can help them position for an effective recovery.

Our campaign / target markets for 2020/21 are China / Hong Kong, Brazil, South Korea, Singapore and Greece / Central Europe.

In 2019/20 the DIT Maritime team supported over £430 million in Export Wins including over £173 million in our campaign markets. This  total represents 70 Export Wins for 53 individual companies.

We continue to work on the National Shipbuilding Strategy (NSS), mapping UK shipyard and build capability, capacity and competitiveness barriers and identifying relevant domestic and overseas build programmes. At the same time we are working with BEIS colleagues to build a business case for the reintroduction of the Home Shipbuilding Guarantee Scheme which will provide working capital and other financial support for UK builders. 

Many of our markets are starting to trade again and we will forward more situation reports as we receive them. In the meantime, please let me know if you have any queries about any overseas markets.

BRAZIL MARKET UPDATE

In the oil and gas sector – closely related to our work in Brazil, Petrobras has recently announced a cut of 200,000 barrels of a day and both Petrobras and Transpetro, the shipping company (Part of Petrobras holding), will reduce OPEX significantly. Those changes are due to the reduction of the oil price and the impact of COVID 19, which is more related to refinery costs and volume of fuel consumption.

Brazilian companies are trying to adapt their business to guarantee continuity after the crisis and reduce the longer term impact.

Although, there are no new programmes for vessel construction to support the exploration and production programmes, we understand the impact will be on chartering prices and cancellations of future vessel builds. 

In terms of UK supply chain in the offshore sector, although opportunities remain in operations and maintenance, this sector may be indirectly affected as ship owners reduce their investment in new technologies or delay maintenance.

DIT will focus on areas such as shipping services and service contracts, as well as technology to support CO2 emissions reduction, which should remain a key focus for the industry. 

CHINA MARKET UPDATE

The Chinese maritime sector is live again, DIT China is standing by to support and currently assisting companies in-market. China will continue to build 30 – 40% of global vessel and although these volumes will be down on previous years, the market will recover.

It is worth noting that there are a few restrictions which have to be considered when travelling to China during the next few months. Not least that any visit to China will require a 14-day quarantine. However, your commercial ground work can be carried out through the quarantine period and DIT China is there to assist you. You will be tested for COViD-19 on arrival in China and your company needs to cover all costs during the quarantine period including the medical test.

  1. You will need to apply for a special visa to visit China  and you will need to consult the Chinese Embassy. The Chinese government has stopped issuing regular business visas at this time.
  2. There is only one flight per week coming into China from the UK at this time.
  3. Some regional Chinese governments may have separate requirements – i.e. for further quarantine time – so you need to consult your in-country contacts or ask DIT China to enquire ahead of any visit.
  4. Please also take the FCO travel advice into account.

Most Chinese shipyards returned to work in February.

China Association of National Shipbuilding (CANS) said it was generally hard for the vessel makers to resume work and deliver vessels on time and some vessels currently under construction are being delayed with some slipping into 2021. Delivery risk is gradually shifting from the shipyard to the shipowner and new ship orders are expected to decrease by 25% compared to 2019, with orders expect to pick up in 2021.

Issues affecting new ship delivery are key ship components and logistics from Europe and recently lifted movement restrictions resulting in staff shortages and difficulties in recruitment.

Issues affecting ship owners and decision makers are concerns about license extension and potential delays of ship delivery and shortage of investor funds, especially those from overseas shipowners.

The delays are also having an impact on the fitting of scrubbers.

 According to China Association of the National Shipbuilding Industry statistics from January to February:

  • Vessel completion 426 DWT, a 26.7% decline year on year;
  • New orders 332 DWT, a 41.4% growth year on year;
  • By monitoring 75 Key companies in the Chinese shipping industry, the gross industry output value is 33.2 billion RMB, a decline of 26.8% year on year.
  • The output value of ship building is 15.6 billion RMB, a decline of 27% year on year;
  • The output value of Ship equipment is 25.3 billion RMB, a decline of 31.1% year on year
  • The output value of ship repair is 21 billion, a growth of 8.9% year on year.
CRUISE SECTOR

The cruise industry has been significantly affected by the outbreak and there will continue to be a significant financial impact on the income projections of the cruise operators. For example, Chongqing Century Cruise company has cancelled cruise plan till the end of June.

China has suspended International Cruise departures from China ports and passenger liners between China and Japan, Korea since end of January.

SUPPORT FOR THE SECTOR

China State Shipbuilding Group (CSSC) has issued “epidemic prevention and control bonds and ministries published several notices to provide financial support and tax incentives.

Local municipals have supported local shipping industries by arranging for people to return to their place of work and provide essential supplies to help the ship building industry resume production.

There will be a phased reduction of port operation service charges and cargo port charges and port facilities security charges will be reduced by 20% respectively

Port enterprises are expected to reduce the burden on shippers by 380 million yuan; abolish mandatory emergency response services and charges for non-oil tanker cargo ships.

The ship oil pollution damage compensation fund will be halved for imports and exports from March 1st to June 30.

MSA published “Guidance on the Prevention and Control of COVID-19 on board” on March and this guidance has been taken by International Maritime Organization (IMO) as official guidance for all the IMO members.

PORTS

18 port groups announced preferential measures for stockpiling fees during the epidemic. This initiative is mainly to extend the free storage period for these ports for heavy containers – imported and exported – during the Spring Festival holiday and epidemic period. These 18 ports include Guangzhou Port Co., Ltd,Shanghai Port Group, Ningbo Zhoushan Port Co., Ltd., Jiangsu Port Group, Shandong Port Group, Tianjin Port Group.

Port operators are encouraged to continue to grant concessions such as reductions in warehouse fees to small and micro enterprises affected by the epidemic.

THE FUTURE

In the longer term we believe that there will be opportunities on digital marine, maritime big data analysis, ship automatic identification system and Remote Ship Identification and Tracking System.

  • More shipping and shipbuilding enterprises will make active use of big data technology to tap market opportunities, find customers, reduce costs and prevent risks. Big data’s value will become more prominent, and its application will be further deepened. There will be opportunities for big data technology, and information analysis providers from the UK.
  • As online training becomes more popular this may offer an opportunity for providers of online maritime skills, education and training.
  • According to HFW, the number of arbitration and lawsuit cases will significantly increase during epidemic period. This may be a potential opportunity area for maritime legal service companies.
  • It is expected that the delivery time of new build vessels on the order books will be affected, and ship owners may place orders on hold, due to the epidemic, which may result in contract disputes. This may bring business opportunities for the UK legal firms specialising in the maritime industry.
  • Although the industry is currently dominated by Chinese providers the crisis will increase the awareness of shipping insurance offering an opportunity for UK companies who can provide competitive products once the limitations are relaxed – a process which China started to implement last year.
SINGAPORE MARKET UPDATE

Singapore has instigated very strict border controls and the lock down has been extended to 1st June. However, DIT, supported by the British Chamber in Singapore, is actively working with companies in this market.

PORTS & TERMINALS

We plan to focus some resource on African projects in the year including Egypt. More details soon.

EVENTS 2020/21

A number of 2019/20 events have been cancelled or postponed due to the Coronavirus. As of this week the DIT event programme looks as below:

Red indicates where an event may be cancelled.  Orange indicates where events have moved from their original dates.

To note that some elements of Shanghai Shipping Week may move to Sep/Oct or may just happen next April.

MONTH START END LOCATION EVENT TITLE EVENT TYPE
Apr 22 22 Online Brazil market webinar Webinar
May 12 12 Online Singapore Webinar for UK companies based in the market Webinar
July 1 2 UK Marinetech Expo and Maritime UK awards in Plymouth UK event
Sep 11 20 UK Southampton Boat Show UK event
Sep tbc tbc UK Seawork UK UK event
Sep 23 26 Monaco Monaco Yacht Show Overseas event
Sep/Oct 30 2 Singapore APM Overseas event
Maybe Sep     Brazil Low Carbon/Green Marine tbc Overseas Event
Oct 13 14 UK Maritime UK Week UK event
Oct 13 14 UK Global Maritime Forum UK event
Oct 13 15 Korea Offshore Korea Overseas event
Oct 26 30 Greece Posadonia Overseas event
Oct 27 29 Brazil Marintec South America (Rio) Overseas event
Nov 3 5 Singapore Seawork Asia Overseas event
Nov 16 17 Brazil UK&Brazil Partners in Energy (annual Energy Showcase) Overseas event
Nov 17 23 HK HK Maritime Week Overseas event
Nov 17 19 Netherlands METS Overseas event
Dec tbc tbc UK Ocenology International London UK event
Dec 9 11 China INMEX China Overseas event
Jan 18   Germany Dusseldorf Boat Show Overseas event
Feb 15 17 USA Oceanology Americas Overseas event
Feb 2 5 Germany SMM Hamburg Overseas event
Mar 30 1 Vietnam INMEX Vietnam Overseas event
TAP EVENTS 2020/21

At this time, no TAP events have been cancelled.

DATE EVENT LOCATION TCP CONTACT
02-Feb20 SMM Hamburg Germany Society of Maritime Industries https://www.maritimeindustries.org/
26-Oct-20 Posidonia Athens Greece Society of Maritime Industries https://www.maritimeindustries.org/
17-Nov-20 METS Netherlands British Marine https://britishmarine.co.uk/
18-Jan-21 Dusseldorf Germany British Marine https://britishmarine.co.uk/
13-Feb-21 Miami Boat show USA British Marine https://britishmarine.co.uk/
30-Mar-21 Inmex Vietnam Vietnam Society of Maritime Industries https://www.maritimeindustries.org/

If you wish to learn more on this please contact John Strang at the below address or contact the DIT at gov.uk/dit.