Coronavirus fallout for ocean shipping intensifies

Only a few short months ago, ocean shipping was overflowing with optimism on the prospects of 2020. Instead, the year is shaping up to be a disaster.

Stock prices are collapsing, losses are piling up and some segments are flirting with all-time lows. The outbreak has made an already weak shipping period exponentially worse.

According to Jon Chappell, the shipping analyst at Evercore ISI, “The impact on physical trade flows and, potentially more importantly, the uncertainty of this virus is resulting in unprecedented measures and precipitous declines in rates across all shipping segments.

“China is the incremental buyer of nearly every major commodity, with outsized impacts on the iron ore and, increasingly, the crude oil and LNG [liquefied natural gas] markets,” said Chappell.

“By shutting down industrial production and limiting refinery runs, commodity demand is slumping, while a state-owned oil company has even attempted to declare force majeure on contractual LNG imports [under force majeure, a party declares that it cannot perform].