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Published December 7, 2023
The shipping industry is the backbone of global trade, transporting about 80% of the world’s merchandise by volume. The COVID-19 pandemic, however, has exposed the fragility and vulnerability of this vital sector, as well as the mistakes and miscalculations made by some of its players.
One of the biggest blunders committed by the container shipping industry was the rush to order new vessels during the pandemic, expecting that the surge in demand for consumer goods would last for years. According to the U.S. International Trade Commission (USITC), shipbuilders have orders totaling about 26% of the world’s containership capacity, with the peak of deliveries coming over the next two years.
This overcapacity has created a glut of ships that are either idled or underused, as the demand for containerized cargo has slowed down after the initial spike. Freight rates have also plummeted, barely covering the sailing costs for many shipowners.
The pandemic has also posed significant challenges for the health and safety of seafarers, who are the unsung heroes of the maritime sector. Due to travel restrictions and border closures, hundreds of thousands of seafarers have been stranded on board ships for months beyond their contracts, unable to return home or get medical care. Others have been unable to join their ships, losing their income and livelihoods
The pandemic has also highlighted the need for more digitalization and trade facilitation in the maritime sector, as well as more resilience and sustainability. Some of the measures that have been implemented or advocated by the USITC and other stakeholders include pre-arrival processing, single windows, transit corridors, electronic documentation, port community systems, and green shipping practices
The shipping industry has played a vital role in the global response to the COVID-19 pandemic, ensuring the continued delivery of critical supplies and trade flows. However, it has also suffered from the impact of the pandemic, as well as from its own strategic errors. The industry needs to learn from its mistakes and adapt to the new realities of the post-pandemic world, with more innovation, collaboration, and responsibility.
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