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How is the Second Wave of COVID-19 in India Affecting the Global Shipping Industry?

Editor, TRANSFIN.
May 10, 2021 9:08 AM 5 min read
Editorial

India’s escalating Second Wave of COVID-19 is shaking up the global shipping industry.

On Sunday, 14 crew members on a cargo ship ferrying 3,000 tonnes of rice from India to South Africa tested positive off the coast of Durban. The vessel was subsequently put under quarantine and a contact-tracing hunt was launched to isolate everyone who might have been exposed.

Fears of such virus spillovers have forced important ports in Singapore, China, UAE, UK and Canada to bar ships from changing crew members who have recently travelled from India or denying entry to Indian seafarers altogether.

Maritime Transportation for Dummies

First off, the shipping industry is a big deal. Not exaggerating, but it truly is the backbone of the global economy given that 80% of international trade by volume (and 70% by value) is carried out via sea.

Before the pandemic, the outlook for this industry was mixed. On one hand, a general upswing in global trade saw it expand at its fastest pace in five years (in 2017). But on the other hand, the rising tide of trade protectionism, the US-China trade war and occasional geopolitical frictions (think chokepoints) soured sentiments.

COVID-19 upended everything. Many ports were closed, demand for cargo plummeted and bankruptcies skyrocketed. Meanwhile, disputes surrounding overtime pay and force majeure clauses fuelled tensions onboard. The general economic recovery many countries have been witnessing in recent months has put the industry on more stable ground. But as the pandemic is far from over, uncertainties remain.

 

The Pandemic’s Effects on Seafarers

For those aboard cargo ships, the pandemic has been a living hell. Seafarers endured - and are still enduring - a “humanitarian and safety crisis”, to use the words of the UN Secretary-General.

FYI: On an average day, nearly one million seafarers will be working on some 60,000 large cargo vessels worldwide. The worldwide population of seafarers is estimated at 1,647,500, of which 774,000 are officers and 873,500 are "ratings" (aka departmental staff).

Of particular concern were crew changes (basically when a crew is relieved and replaced at a particular port). Because they involve significant human interaction between different nationalities, they were considered a risky endeavour and temporarily suspended by many shipping companies.

Inadvertently, this meant tens of thousands of sailors were stranded at sea without a clue regarding when they would be able to return home. Border closures and restrictions on travel further made it difficult - if not impossible - for crew members to be repatriated to their home countries.

Many were left with no option besides working beyond their contractual lengths. Some sailors were onboard for over 15 months as opposed to the 11 months maximum tenure stipulated under the International Labour Organisation’s Maritime Labour Convention. An estimated 400,000 seafarers were still stranded at sea as of December 2020.

Now, let’s come back to India…

 

Indians and the Global Shipping Industry

India is a major contributor of sailors. In 2019, as per Government data, 234,886 seafarers were Indian, about 15% of the global total. The sector is also a burgeoning source of employment in the country - it added 25,000 jobs last year despite the coronavirus.

Now, with the Second Wave in full swing, even as many airports have barred direct flights from India, ports have begun denying entry to Indian seafarers and to ships travelling from South Asia in general. With crew changes involving Indians suspended and travel restrictions up again, expect rising numbers of Indians stranded at sea in the coming weeks.

Major maritime companies like Wilhelmsen and Maersk employ tens of thousands of Indians. Now, hiring programmes have halted. With companies already cash-strapped and recruiting less than usual, the share of Indian seafarers may drop in the near-term.

 

Has This Affected Trade To and From India?

At least till now, no.

The latest export and import numbers (for April) saw a record 197.03% YoY growth in exports to $30.21bn and a 165.99% jump in imports to $45.45bn. Worth noting though, that these figures benefited from a low base effect (India was in a national lockdown for all of April 2020) and may not reflect the full impact for the Second Wave - which we might see in May's numbers.

Going forward, though, if ports continue to prohibit Indian sailors and ships, trade would assuredly be affected. Not only would this be harmful for an economy that escaped a devastating recession by the skin of its teeth, but coming at a time when recovering countries are inching towards the pre-pandemic status quo, this puts India at a disastrous disadvantage, relatively speaking.

FYI: Medical aid being sent by foreign nations won't be impacted since the crews involved are not Indian + large chunks of this aid is anyway being sent via airplanes.

 

What’s The Way Out?

The best solution remains mass vaccinations.

The National Union of Seafarers of India’s appeals to the Government to designate seafarers as essential workers fell on deaf ears. (Most Indian maritime workers are in the 18-44 age group, so they could register for doses only from April 28th.)

India’s failure to inoculate its sailors goes against the rules of the International Maritime Organisation, which mandate vaccinations. This reflects poorly on us and also hurts the interests of our workers. Shipping companies are now increasingly hiring seafarers from Indonesia and the Philippines - countries that did vaccinate their maritime workers.

Not one to refrain from boasting about waking up from a stupor, the Government is now claiming that it has tied up with the port hospitals at Kolkata, Bombay and Kochi for vaccination drives. But as we have seen, the vaccine roll-out has been faulty in more ways than one + there is an acute shortage of doses already. So a speedy vaccination of India’s 200,000+ sailors is probably going to remain a pipe dream for some time.

On a global level, a return to the crew change stoppages of 2020 would inflict heavy damage on supply chains. Probably not as severe as the disruptions we saw last year since this time most actions revolve around one country. But still enough to wreak havoc on the delicate, fine-tuned machine that is global trade.

Think Suez Canal blockage, but with a hurdle as big as an entire subcontinent.

FIN.
 

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