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2020: impacts on the maritime industry

Phil Parry

“2020 has undoubtedly been a year of uncertainty for us all – the coronavirus has had a massive impact on the market, and we have seen the sharpest economic trade decline in over 35 years. The impact on the different shipping sectors has varied, but the general outlook remains uncertain and many in the industry are firefighting and keeping very tight control of costs.” – Phil Parry, Chairman, Spinnaker

Spinnaker published the 2020 salary benchmarking findings for shore-based roles last October, and now Spinnaker’s Maritime HR Association team have turned their attention to their more in-depth market analysis. Chairman Phil Parry has compiled a foreword to the job family specific reports, providing an economic overview of the general shipping market – with special thanks to Stephen Gordon at Clarksons Research for his valuable insights. Considering pay and people impacts, environmental regulations, financing and the Covid-19 economy, key points from this report include:

  • Prior to the pandemic, average forecasts for world economic growth (GDP) were at just over 3%. Those forecasts have steadily declined and bottomed out at around -5%. In China specifically, where growth was forecast at 6%, the expectation is for less than 2% growth going forward. And in terms of world seaborne trade, 2021 is looking like a year of zero growth.
  • In March, April and May queues into ports caused massive congestion and delays and consequential costs and legal disputes. Crew changes have of course been very difficult this year; in addition to the social and welfare costs to seafarers and their families, on-boarding costs have increased three-fold in some cases with flights home increasing by nearly 50% alone.  
  • Covid-19 aside, the megatrend that is impacting the industry is rapid decarbonisation to meet the 50% target reduction in total annual greenhouse gas (GHG) emissions by 2050. According to the IMO, this equates to approximately 85% CO2 reduction per ship.
  • The financial landscape is changing with it. The introduction of the Poseidon Principles is helping to align ship finance with society’s decarbonisation goals and, quite separately, the source of capital and styles of lending (leasing deals vs traditional mortgage lending) are vastly different from the pre-recession landscape.
  • The offshore wind sector continues to grow at more than 24% per year, providing potential opportunities for wider maritime industries. Other good news (it’s all relative!) is that compared with other forms of transportation, deep sea cargo shipping suffered a drop in activity (measured by the number of port calls) of “only” 10% in 2020.  This is compared to air cargo which fell by a third, while sadly we saw cruise and passenger shipping disappearing almost entirely.

If you would like more information on which to base your people decisions for the year(s) ahead through receipt of this members-only report – please get in touch by emailing the benchmarking team via mhra@spinnaker-global.com.

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