The International Chamber of Shipping, and the International Maritime Health Association, together with tanker owners’ association INTERTANKO have issued new protocols to mitigate the risk of COVID-19 cases on board.

The protocols aim to safeguard the health of seafarers and guarantee the safe operations of maritime trade – offering governments and the general public reassurance that seafarers can embark and disembark ships safely.

Recently, there have been concerns over COVID-19 infections on board ships, due to a small minority failing to adhere to industry guidance. While the number of cases has been limited, newly issued protocols are expected provide shipowners and operators with the tools to safely manage cases on vessels.

Building on previous health guidance released by ICS in May, the new protocols equip ships operators with two useful instruments, namely a flowchart to help identify the process to follow when managing a large number of suspected cases on vessels; and a PCR testing procedures matrix to help identify what to do and when prior to boarding and if a suspect case is identified on ships.

Since the beginning of the pandemic, COVID-19 related travel restrictions have limited the global shipping industry’s ability to rotate ships’ crew. There are now over a quarter of a million seafarers stranded at sea, waiting to be repatriated.

In light of this humanitarian crisis and its far-reaching impact on the industry, ICS put forward COVID-19 health guidance  in March, updated in May, to protect the health of seafarers and passengers, as well as the general public.

Natalie Shaw, Director of Employment Affairs for the International Chamber of Shipping said:

“The new protocols build on our previous guidance and should give confidence to the industry and governments that maritime trade can operate safely. Especially when there are suspected COVID-19 cases on board.

“We have observed a small number of COVID-19 cases among ships’ crew in recent weeks and decided to take the initiative to create new protocols, together with IMHA and INTERTANKO.”

The document “Coronavirus (COVID-19) Protocols to Mitigate the Risks of Cases On Board Ships” from ICS and other major bodies is available for download here.

Source: hongkongmaritimehub


AGCS warned the pandemic could endanger long-term safety improvements in the maritime industry despite large shipping losses being at a record low, having fallen by over 20% year-on-year.

The company’s global product leader hull insurance, Baptiste Ossena said “Coronavirus has struck at a difficult time for the maritime industry, as it seeks to reduce its emissions, navigates issues such as climate change, political risks and piracy, and deals with ongoing problems such as fires on vessels.”

“Now the sector also faces the task of operating in a very different world, with the uncertain public health and economic implications of the pandemic.”

In 2019, 41 total losses of vessels were reported around the world, down from 53 on the preceding 12 months – a 70% decline over 10 years. More than 950 shipping losses have been reported since 2010. AGCS attributes the decline to sustained efforts in the areas of regulation, training and technological advancement.

Asia Pacific remains the top loss location with 12 vessels in 2019 and 228 vessels over the past decade, accounting for one in four of all losses. The high levels of trade, busy shipping lanes, older fleets, typhoon exposure, and safety issues on some domestic ferry routes are contributing factors.

AGCS global head of Marine Risk, Captain Rahul Khanna said “It is crucial that safety and maintenance standards are not impacted by any downturn.”

He noted that as owners face decreased revenues, the historical record suggests crew and maintenance budgets are “among the first areas that can be cut and this can impact the safe operations of vessels and machinery, potentially causing damage or breakdown, which in turn can lead to groundings or collisions.”

Though the industry has continued to operate through the pandemic, despite disruption at ports and to crew changes, the Allianz report highlights challenges that could heighten the risks:

  • The lack of crew changes might lead to an increase in human error on board vessels.
  • The disruption of essential maintenance and servicing increases the risk of machinery damage which is already one of the major causes of insurance claims.
  • Reduced/delayed surveys and port inspections could lead to unsafe practices or undetected defective equipment.
  • The growing number of cruise ships and oil tankers in lay-up around the world pose significant financial exposures, due to the potential threat from extreme weather, piracy or political risks.

The review also notes that events in the Gulf of Oman and the South China Sea show political rivalries are increasingly being played out on the high seas and that shipping is likely to continue to be drawn into geopolitical disputes.

Heightened political risk and unrest globally has implications for shipping, such as the ability to secure crews and access ports safely. In addition, piracy remains a major threat with the Gulf of Guinea re-emerging as the global hotspot, Latin America seeing armed robbery increase and renewed activity in the Singapore Strait.

Shipowners are also concerned about the prospect of cyber conflicts. There has been a growing number of GPS spoofing attacks on ships, particularly in the Middle East and China, while there have been reports of a 400% increase in attempted cyber attacks on the maritime sector since the coronavirus outbreak.


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The maritime sector has remained resilient amid the Covid-19 pandemic, with container throughput falling by only 2 per cent from January to July this year compared with the same period last year.

This is lower than has been registered at many other ports, said Senior Minister of State for Transport Chee Hong Tat on Tuesday (Aug 25).

“We have kept our port open and goods flowing,” he said.

“In fact, we saw some diversion of traffic from other ports to the port of Singapore.”

In order to build on this, the Government will look to expand the base of maritime talent in Singapore, said Mr Chee at an online dialogue to promote job opportunities in the sector.

He announced one such initiative on Tuesday to offer more than 200 traineeships in the maritime sector to new and recent graduates. They will come under the SGUnited Traineeships Programme, which aims to give graduates and soon-to-be graduates industry experience in various sectors.

Organisations that will be offering the traineeships include PSA, Jurong Port and Maersk Singapore. Those interested can apply for roles in areas such as operations, engineering and corporate job functions.

Mr Chee said: “This is a good start, but we are not going to stop here.

“We will continue to work with the industry to create more training and attachment opportunities to grow our maritime talent pool.”

He said that the sector offers opportunities for travel and pays attractive salaries.

But he acknowledged it is still under pressure with the global economy slowing down, affecting trade volumes and the movement of goods.

However, while companies become more cautious in the current climate, the Government is confident that the maritime sector will continue growing after the Covid-19 pandemic ends, he said.

Training workers now will help to protect Singapore’s position as a global hub port and international maritime centre.

Moving forward, Singapore will also look to combine the strengths of its sea port and airport to offer multi-modal logistic solutions.

Mr Chee said this will enable the Republic to seize opportunities created by the rapid growth of e-commerce in the region.

“Even though you are placing the orders online, the goods still have to be delivered physically,” he said.

“This will give an extra boost to intra-regional trade, (so) connectivity and logistics will play increasingly important roles.”
Source: The Straits Times


The International Chamber of Shipping (ICS), along with the International Maritime Health Association (IMHA) and the International Association of Independent Tanker Owners (INTERTANKO), have issued new protocols to mitigate the risk of COVID-19 cases on board. The protocols aim to safeguard the health of seafarers and guarantee the safe operations of maritime trade – offering governments and the general public reassurance that seafarers can embark and disembark ships safely.

Recently, there have been concerns over COVID-19 infections on board ships, due to a small minority failing to adhere to industry guidance. While the number of cases has been limited, newly issued protocols will provide shipowners and operators with the tools to safely manage cases on vessels. Building on previous health guidance released by ICS in May, the new protocols equip ships operators with two useful instruments:

  1. A flowchart to help identify the process to follow when managing a larger number of suspected cases on vessels; and
  2. A PCR testing procedures matrix to help identify what to do and when prior to boarding and if a suspect case is identified on ships.

Since the beginning of the pandemic, COVID-19 related travel restrictions have limited the global shipping industry’s ability to rotate ships’ crew. There are now over a quarter of a million seafarers stranded at sea, waiting to be repatriated.

In light of this humanitarian crisis and its far-reaching impact on the industry, ICS put forward COVID-19 health guidance  in March, updated in May, to protect the health of seafarers and passengers, as well as the general public.

These comprehensive documents ensure the safe operations of maritime trade and serve as a reassurance to governments that crew change and seaborne trade pose limited health risks.

Natalie Shaw, Director of Employment Affairs for the International Chamber of Shipping said:

“The new protocols build on our previous guidance and should give confidence to the industry and governments that maritime trade can operate safely. Especially when there are suspected COVID-19 cases on board.

“We have observed a small number of COVID-19 cases among ships’ crew in recent weeks and decided to take the initiative to create new protocols, together with IMHA and INTERTANKO.”

The document “Coronavirus (COVID-19) Protocols to Mitigate the Risks of Cases On Board Ships” from ICS and other major bodies is available for download here.

Download free Coronavirus (COVID-19) guidance to help protect the health of seafarers (and passengers) as well as the general public here.

The 12-step plan entitled “Recommended Framework of Protocols for Ensuring Safe Ship Crew Changes and Travel during the Coronavirus disease (COVID-19) pandemic”, as circulated by IMO, can be found on the IMO website here.

Download free 12-Step Guide poster to the IMO’s Recommended Framework of Protocols for Ensuring Safe Ship Crew Changes and Travel here
Source:maritimesky


Severity: Critical Alert

Exit/Entry: Officials in Brazil extend ground and maritime entry ban through at least Sept. 24, due to coronavirus disease. Restrictions remain.

Alert Begins 28 Aug 2020 01:21 PM UTC
Alert Expires 14 Sep 2020 11:59 PM UTC

  • Incident: COVID-19 restrictions
  • Location(s): Nationwide (map)
  • Time Frame: Indefinite
  • Impact: Transport, travel, and business disruptions

Summary
As part of ongoing efforts to curb the spread of coronavirus disease (COVID-19), officials in Brazil have extended the travel ban prohibiting most nonresident foreign nationals from entering the country by land or water through at least Sept. 24. The ground and maritime borders will remain closed until further notice. Brazilian citizens, permanent residents, and foreign residents working for international organizations or foreign governments, as well as close family members of Brazilian citizens and residents, or people working for trade or humanitarian purposes are exempt from the ban.

International flights have resumed. Foreign citizens are allowed to enter Brazil by air, except for the Goias, Mato Grosso do Sul, Roraima, Rondonia, Rio Grande do Sul, and Tocantins states. Before traveling to Brazil, visitors will have to prove they have health insurance, and their visits must not be longer than 90 days.

Domestically, authorities in most states have imposed additional, varying movement and business restrictions. Some of the restrictions in the largest states are:

 

  • Sao Paulo: Authorities have extended orders for residents to remain at home until at least Sept. 6, and continue to implement a five-tier recovery plan. The city of Sao Paulo and surrounding areas remain on Phase 3 of the plan, under which retail stores, restaurants, personal care, and other businesses may open at 40-percent capacity. No region in the state is on Phase 4 or Phase 5, the least restrictive phases.

 

  • Rio de Janeiro: Authorities have eased multiple business restrictions, allowing restaurants, bars, gyms, cinemas, tourist sites, and personal care businesses to operate at 50-percent capacity. Residents must wear protective facemasks in public settings. In the Metropolitan Area of Rio de Janeiro, sport and cultural events outdoors are also allowed.

 

  • Minas Gerais: Officials are implementing a four-tiered system to reopen the economy, dividing the state into several regions. No region is on Phase 4, the least restrictive. Belo Horizonte and its surrounding areas will ease business restrictions starting Aug. 31. Starting Sept. 4, bars and restaurants will be allowed to open without restrictions on closing times, as well as on weekends in Belo Horizonte and surrounding areas.

 

  • Bahia: Authorities have suspended inter-municipal transport between various municipalities. Public events remain canceled statewide. The most-affected municipalities have a nightly curfew in place. As of Aug. 28, eased business restrictions in Eunapolis allow restaurants and bars to operate at 40-percent capacity. Residents must wear protective facemasks in public settings.

 

State and municipal officials could continue to tighten, reapply, or deescalate their local restrictive measures over the coming weeks, depending on local disease activity and government preparedness to respond to the disease. All restrictions are subject to amendment at short notice.

Background and Analysis
The measures taken by Brazilian authorities are similar to actions taken by other governments globally in response to the spread of COVID-19. COVID-19 is a viral respiratory disease caused by infection with the SARS-CoV-2 virus (previously known as 2019-nCoV). Symptoms occur 1-14 days following exposure (average of 3-7 days). These symptoms include fever, fatigue, cough, difficulty breathing, sometimes worsening to pneumonia and kidney failure – especially in those with underlying medical conditions.

Advice
Strictly heed the instructions of authorities. Abide by local health and safety measures. Confirm appointments and travel arrangements.

Emphasize basic health precautions, especially frequent handwashing with soap and water, or an alcohol-based hand sanitizer if soap and water are unavailable. Practice good coughing/sneezing etiquette (i.e., covering coughs and sneezes with a disposable tissue, maintaining distance from others, and washing hands). There is no evidence that the influenza vaccine, antibiotics, or antiviral medications will prevent this disease, highlighting the importance of diligent basic health precautions.

Source: worldaware


With Greece taking actions to control a resurgence of COVID-19 and more travel restrictions being placed on people returning from Greece, MSC Cruises announced today that it has decided to postpone for a month the company’s planned cruises to Greece.

After highlighting the country’s success in controlling the virus and declaring that Greece was ready for tourists, a week ago faced with a growing number of cases of the virus the country announced new restrictions. Bars and restaurants were ordered to close between midnight and 7 a.m. and gatherings of more than 50 people were also prohibited. The restrictions have also been extended to more parts of the country.

There had also been calls for Greece to reconsider its decision to reopen its ports to cruise ships. While the ports, so far, remain open, other countries have begun to add requirements for travelers returning from Greece. Italy was among the countries imposing a mandatory requirement for COVID-19 testing with 48 hours after returning from Greece, Malta, Croatia and Spain.

“In connection with the recent introduction of additional testing measures for residents of Italy having traveled to Greece, we are seeing cancellations and a softening in demand since the ship’s itinerary includes as many as three ports in that country,” MSC said in the announcement delaying by four weeks its first cruise to the Eastern Mediterranean. “MSC Cruises believes that reservations will start to pick up again in the coming weeks due to the appeal of the itinerary.”

The MSC cruise ship MSC Magnifica had been scheduled to resume cruises from Bari and Trieste, Italy on August 29 to three ports in Greece. The cruises were only being offered to residents of the Schengen area, although MSC reports that the majority of the passengers for these and its Western Mediterranean cruises have been Italian nationals and residents.

MSC is continuing 7-night cruises aboard its MSC Grandiosa between the Italian ports of Genoa, Civitavecchia, Naples and Palermo with a call at Valetta, Malta. The cruise line also anticipates resuming a more extensive program of cruises for the winter season starting as early as November 2020.

In addition to MSC Cruises, German’s TUI cruise line announced plans to resume sailing to Greece in mid-September. The company is planning to use one of its Mein Schiff cruise ships for 7-night cruises from Crete to Piraeus and Corfu and was also offering land extensions for additional nights on the Greek mainland. The company recently repositioned two of its ships, Mein Schiff 3 which is now docked in Greece and Mein Schiff 5 which is currently en route to Greece.

Several small ship companies have also been operating in Greece while other large cruise lines were also reported considering cruises to Greece.

Source: maritime-executive


Klaveness Combination Carriers reported that two crew members on board one of its CABU vessels had been infected with COVID-19 virus.

The infection cases were confirmed in July, the company revealed in its Q2 earnings report.

The confirmed positive persons were signed off and isolated until no longer being infectious, the company said. After consistent negative results from repetitive COVID-19 testing of the entire crew and complete cleaning and the disinfection of the vessel’s accommodation, the vessel recommenced trading in early August after 14 days off-hire.

Klaveness said that the total financial effect on the Q3 2020 results from this incident will likely be around $ 0.4 million including loss from the re-let of the caustic soda cargo, off-hire, rescheduling and additional costs relating to the crew.

“It continues to be difficult to make crew changes, get ship managers, service personnel and vetting inspectors on board. It has also been necessary to deviate vessels to get supplies on board and make crew changes, leading to off-hire and additional costs,” the company said, adding that so far these factors have had a limited impact on the company’s operation and earnings.

The ship owner said that despite significant efforts like deviation of five vessels to Manila Bay for changes of Filipino crew, only around 53% of normal scheduled Filipino crew change have been possible since the start of the COVID-19, while 90% of planned crew changes for Europeans have succeeded.

Klaveness Combination Carriers reported a net profit after tax for Q2 ended of $ 8.4 million compared to a loss of $ 1.9 million for the same period last year and up from $ 4.3 million in Q1 2020.

Adjusted EBITDA for the first half 2020 ended at $ 28.7 million, up from $ 9.9 million in first half 2019, mainly driven by CLEANBU TCs secured in a strong tanker market, a substantially higher caustic soda volume for the CABU vessels and two more vessels on water.

When it comes to off-hire days, the company will have two CABU vessels undergo periodic drydocking in 2020 to install ballast water management systems. As part of its decarbonization measures, KCC’s plans to invest in fuel-saving silicone antifouling coating as well as an ultrasonic protection system to protect propellers from marine growth.

The earnings outlook for the second half of 2020 is positive for both the CABU and CLEANBU fleet albeit at a lower level than reported for the first half of 2020, Klaveness believes.

As disclosed, the outlook is supported by secured COA and TC contracts, partly secured at strong tanker market levels in Q1/Q2 2020, and a stronger dry bulk market.

The earnings report shows that 79% of the operational tanker market exposure for 2H 2020 has been secured (70% fixed rate) and 27% for 1H 2021 (15% fixed rate).

Source: offshore-energy


The pace of container port capacity expansion is forecast to contract at least 40% over the next five years in the wake of the COVID-19 induced slowdown in port throughput, according to the latest Global Container Terminal Operators Annual Review and Forecast report published by global shipping consultancy Drewry.

Global container terminal capacity is projected to grow at an average annual rate of 2.1% over the next five years, equating to an additional 25 million teu a year. This is well below the capacity growth seen over the past decade, when the average annual increase was more than 40 million teu a year.

Projected regional container handling and average annual growth, 2019-24

Source: Drewry’s Global Container Terminal Operators Annual Review and Forecast 2020/21

Port throughput is projected to grow at an average annual rate of 3.5% over this period from 801 million teu in 2019 to reach 951 million teu by 2024. But risks remain to this outlook should a resurgence in COVID-19 cases cause further widespread economic lockdowns over the forecast period.

Eleanor Hadland, author of the report and Drewry’s senior analyst for ports and terminals said: “Our five-year forecast for global container port handling has been cut back drastically due to the COVID-19 pandemic, and the risks remain heavily weighted to the downside.”

As a result of the pandemic operators and port authorities are actively reviewing delivery of planned projects in the light of the drastic slowdown in economic growth and uncertain short-to-medium-term outlook.

“Major expansion projects and greenfield projects that are already under construction and due for commissioning in 2020 and 2021 may face minor delays due to interruptions to global supply chains during 1H20,” added Hadland. “However, for projects which are currently at an earlier stage of planning, particularly where construction contracts and equipment orders have not yet been tendered, suspension or cancellation is more likely if market conditions remain poor.”

In recent years global operators had already scaled back investment plans, with only limited greenfield projects in the pipeline. However, leading operators look set to continue to lead the way in terms of terminal automation. Currently more than three quarters of automated terminals are operators by global and international operators, and of the 22 automated terminal projects currently planned (including both greenfield and brownfield), more than 80% will be delivered by this group of leading operators.

Looking back at 2019 performance, the group of 21 companies classified by Drewry as global / international terminal operators out-performed the market, with combined equity-adjusted volumes growing 4.3% compared to global growth in port throughput of 2.1%. However, this headline figure disguises strongly divergent growth patterns. In 2019 six out of 21 global / international terminal operators reported lower volumes on an equity-adjusted basis.

“Divestment of non-core assets, and the fall-out from the US-China trade war were key factors behind these results,” explained Hadland.

Despite global throughput remaining flat year-on-year PSA retained its top spot in Drewry’s rankings. By contrast, Hutchison Ports saw volumes fall by more than 2% and dropped back to fourth place. DP World, with 2019 throughput only marginally above 2018 levels, also dropped a position. China Cosco Shipping and APM Terminals both reported strong growth in volumes, and both moved up the table to take second and third place respectively.
Top 5 Global/International terminal operators’ equity based throughput league table, 2019

Source: Drewry’s Global Container Terminal Operators Annual Review and Forecast 2020/21

Source: Drewry


Many things have changed in 2020 as we find ourselves confronted with the fallout from the COVID‑19 pandemic. We have all had to examine and adapt our working practices to ensure that we limit the spread of the virus and keep each other safe. Collectively, we have had to learn what lockdown means without precedent or warning.

This situation has affected us all, but the change in daily routine has been more palpable for those of us working ashore. Afloat, as ships have continued to move around the globe, there have been separate issues to address, notably with crew movements, not to mention virus control in cruise ships. Ashore, we have had to be innovative about extracting and managing the information we need to maintain our professional services with fewer people on whom to call. We are relying on our laptops and home broadband, without direct access to our many office IT systems or the ability to physically interact with colleagues and our global networks. Video systems are just not the same!

Lockdown reminds me of being at sea years ago. Communications were extremely limited. When we left the jetty, we were left without access to those who might support and advise us. We waited with bated breath for the Mufax to give us a grainy weather chart and days would pass without updating the ship’s position while the stars and sun remained blanketed behind clouds. Flipping the coin, shore‑side authorities had to wait to receive information from the high seas. These days, we expect and demand the instant exchange of data; it has become the lifeblood of maritime business.

So, what will COVID‑19 change? Will we carry on as before or is this a real chance to move forward and embrace the opportunities that technology offers for automation, Artificial Intelligence and, in some cases, the development of autonomous vessels?

There is no single answer to that question. It will depend on a myriad of factors; types of vessels; their ages; the nature of their operations; the areas in which they sail; their hull and machinery; and the human element. We should not ignore the fact that the following incidents occurred globally between 2015 and 2019: 2,734 hull and machinery damage, 1,817 Collisions, 1,663 Wrecked or Stranded, 1,084 Contacts, 903 Fires/Explosions, 344 Founded, 26 War Loss/Hostilities and 3 crew members missing. The overall desire to improve safety and become more efficient has never been more relevant and we must find ways to achieve this.

There is growing evidence to suggest that life will be different, but is this because we feel it should be, and will it actually happen? Matching expectations with reality will be tricky and will require strong leadership to adapt to the real and perceived desire for change. Many will return to their offices refreshed, having had time to think, research and plan – so often a missing component in our working lives. Some will acknowledge the benefits of spending more time in their home environments. Others will be leaping at the chance to revert to their old routines. The transition back may be more difficult than imagined as we re‑embrace freedom of movement.

Whilst it might appear that not much has been achieved in the past few months, the pace of technology has not been noticeably slowed down by the pandemic. Many companies, particularly small and medium-sized enterprises (SMEs), have been quietly going about their business and will be poised to spring forward once the tethers have been removed. In fact, there may well be a surge of new technologies that may have to be kept in check to ensure optimal integration into existing maritime systems.

Either way, there is a real opportunity to advance Automation, AI and Autonomy in the maritime sector, whilst reducing emissions to meet the stringent new target figures. This will affect all ships, and Uncrewed Ships will be a part of this process. It would be a good outcome for COVID‑19 to have acted as a catalyst for people to review their thoughts and return to work with renewed enthusiasm to make life at sea safer and to let technology enhance the capabilities for all those connected with life at sea.

Why now?

Despite recent challenges, the decade ahead will be transformational as shipping harnesses digitalisation and the drive to decarbonise. There is an enormous need for suitable fuel and emission reduction technologies. When combined with autonomous technologies, they will help the industry move towards meeting the IMO 2050 greenhouse gas reduction targets, as well as enhancing operational efficiencies and making life at sea safer. LR is particularly interested in the outcome of the Short Sea Shipping project being led by the Anglo Belgian Shipping Company, as it will be beneficial to have more solutions and products available that the industry regards as promising and viable environmental and autonomous technological solutions.

Source: LR


Covid-19 coronavirus continues to paralyse the world. Its consequences also affect both the oil market and the tanker transport market. We focus on ensuring a good working environment and protecting the health of our employees and crews while also fulfilling our commitments to our customers. Looking at tanker market developments in Q1, we can see that the upturn at the end of 2019 continued in January 2020. These developments were a direct consequence of structural factors in the form of relatively good growth in the global economy, good demand for oil, balanced stock levels and few ship deliveries – in other words, the factors that previously formed the basis for our belief in a strong market in 2020 and 2021.

While the tanker market declined in February, it was strong again in March, mainly due to a low oil price and a lack of agreement within OPEC+ regarding further production cuts. This resulted in Saudi Arabia, the world’s second largest oil producer, abandoning its production cuts and instead opting to increase its market share through sharply reduced prices to its customers. The price, already at a low level, fell by another 30% overnight. This resulted in significantly increased oil trading – and sharply rising rates in the tanker market. In a short space of time, rates in the VLCC segment rose from around US$25,000/day to US$150,000 – US$200,000/day. In the Suezmax segment, rates rose to US$70,000 – US$100,000/day, depending to some extent on geographical area. Rates also went up in the product segment; MR rose to US$20,000 – US$25,000/day. And that is where they have remained, with occasional fluctuations both upwards and downwards.

However, it is important to point out that a large proportion of the oil that is now transported will be placed in storage close to the consuming countries – both onshore and on vessels. Actual consumption of petrol, diesel and aviation fuel is significantly down as a result of the virus. The reduction is estimated at about 20–25M b/d for March/April/May. Accumulated stocks are now driving the market, but as these stocks gradually start to empty there will be reduced demand for tanker transport. This is the current state of the dynamics.

In early April, OPEC+ (supported by the G20) decided to cut production by 9.7M b/d in May and June (based on October 2018 production), corresponding to about 10% of production. In addition to OPEC+, other G20 countries will also contribute with ‘natural’ production cuts, which means that total production cuts are actually larger. The fact that the world’s major oil producers are now adapting production to the current situation is understandable and basically sound. Whether the reduction will be sufficient to strengthen the oil price depends on how long the effects of the pandemic last.

We should also note that the production cuts here and now do not outweigh the reduced oil consumption. Stock accumulation is therefore likely to continue, probably during most of Q2. We will then hopefully see a slow return to more normal transport flows starting in Q3 – with higher consumption (and drawing of stocks) as a result.

In the short term, it is our assessment that accumulated stocks will contribute to a continuation of the strong market. Production cuts are then likely to bring reduced demand for transport. In this situation, the fact that a relatively large proportion of the storage is on vessels may dampen the negative impact to some extent. This is all said with the greatest respect for the difficulty in making substantiated predictions in the current situation.

Source: rivieramm


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