Maersk, a global transportation giant, decided to suspend the replacement of the crews working on container vessels in operation for 4 weeks. With the global spread of COVID-19 virus, there is even a case in which products shipped by Maersk were rejected at a port.
Maersk stated in an email that due to the sudden shutdown of borders and airline services caused by the COVID-19 virus, the replacement of workers in container vessels is from March 17 to April 14. The decision was made based on the company’s guarantee of crew safety and the need for the company to continue the business service as much as possible. Maersk also mentioned in the email that it is essential to ensure the safety of its workers. In terms of the current situation, suspending the replacement of crews can reduce the extent of their social interaction. In addition, global travelling may strand the crew in a place where they are unable to go back their countries or where they are unable to be assisted.
Maersk also said in the email that Maersk will be keeping contact with all related authorities and organizations and will solve the problem according to the laws and regulations to make sure that their shipping crew will keep forward safely.
According to the data from Alphaliner, so far Maersk has been operating 694 container vessels, including 314 self-owned vessels and 380 vessels that are rented from other companies, with appropriately 4.16 million TEU of transportation capability. There are thousands of workers working on these container vessels.
Worldwide container shipment to be hit hard by virus
In early February a report mentioned that Maersk suffered serious loss from the COVID-19 virus. An analysis from Sea-Intelligence showed that container shipping lines could lose around USD 1.7 billion in revenue due to the coronavirus outbreak. This would have dire consequences for ports and terminals.
With the early outbreak of the coronavirus in Asian countries, many shipping companies canceled numerous flights to Asia. From the fifth week to the fourteenth week after the outbreak, shipping companies canceled around 1.7 TUE of transportation capability, which equals 1 percent of the total transportation capability in the whole year of 2019. In other words, in 2020, the production of new containers around the world will decrease by one percent.
Business of CMA CGM and Hapag-Lloyd also expected to suffer
Among the three major European container lines covered by credit rating agency Moody’s, Maersk is hit the hardest by the coronavirus. But CMA CGM and Hapag-Lloyd are also impacted by the outbreak. Moody’s also mentioned that in terms of individual carriers, Maersk will exert the biggest impact. This is because 30% of the total cargo of Maersk in terms of shipping, ports and tugboat business comes from China.
In addition, Moody’s changed the evaluation result of CMA CGM from “stable” to “negative” earlier in February. Since the acquisition of Ceva last year, CMA CGM has been reviewed and evaluated even more strictly, because the acquisition has led to high debt.
As for Hapag-Lloyd, Moody’s mentioned that shipping business that is related to China in 2019 accounts for 25% of the company’s total income. The first quarter did show a decrease in the volume of goods transported, but it is difficult to forecast whether the company’s credit quality will deteriorate due to the strong performance of Hapag-Lloyd’s liquidity and balance sheet.
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