Flattening the curve
This year has not turned out as expected. During the second half of March, as the gravity of the coronavirus became clear and the WHO declared it a pandemic, most countries imposed strict limitations on the movement of people. We suddenly found ourselves largely confined to our homes, or, in the case of ship and even some barge crews, trapped onboard beyond the end of contracted periods. These restrictions, referred to in many countries as “lockdown”, shared one overarching goal: to stop this deadly virus from spreading uncontrollably. Without these measures, many more people would have been infected, overwhelming health services fighting to keep those falling seriously ill alive.
The focus has been on reducing the peak of infections; flattening the curve.
In the process, untold damage has been done to the economy. The full impact of the corona crisis will not be known for some time yet, but we do know that it has already disrupted the shape of several other curves significantly. Short term it has contributed to a dramatic fall in air travel and private car use, impacting global oil demand. Prices of crude oil and oil products have been on a steep downward curve, in particular during March and April, but begun rising again in May. Tankers have benefitted from a supply glut and seen rates shoot up. But for how long? Other shipping sectors have tried their best to protect freight rates, but predictions for the second quarter of 2020 have been bearish as global trade has, inevitably, been slowing down.
When I wrote the Director’s report for the spring 2020 issue of World Bunkering, I was happy that our industry had managed to navigate much more successfully into the new 2020 global low-sulphur era than many had thought. I was looking forward to IBIA’s Annual Dinner at the start of IP Week on 24 February, where this year we were honoured to host the Secretary General of the IMO, Kitack Lim, at the Chairman’s table, and representatives for IPIECA and BIMCO. I had the pleasure and privilege of sitting next to Kitack Lim during dinner. I was, as always, impressed by his friendly and approachable manner. We were, already then, wary of the growing threat of the coronavirus outbreak, but we were delighted to see many of our members joining us for a hugely enjoyable evening.
During IP Week, I took part in two events as a speaker and panellist. One was the 2nd Fujairah London Breakfast Workshop, hosted by Capt. Salem Al Hmoudi, Director, Fujairah Oil Industry Zone and moderated by Sean Evers of Gulf Intelligence. Other featured speakers at this event were Mike Muller of Vitol Asia and Chris Wood of Uniper Energy DMCC. The subject was, unsurprisingly, how Fujairah was adapting to IMO 2020. Afterwards I went to take part in a panel on cutting carbon in shipping at the ShipInsight conference alongside several well-known names, including Jasper Faber of CE Delft, Chris Millan of Carnival Corp, Bob Sanguinetti of the UK Chamber of Shipping and Peter Hinchliffe, representing the Methanol Institute.
During 2019, I took part in 27 events as a speaker, panellist and moderator, including three IBIA conferences and five IBIA partner events. Locations included London, Fujairah, Limassol, Oslo, Gibraltar, Cape Town, Singapore, Montego Bay, St. Andrews in Scotland, Geneva, Istanbul, Panama City and Athens, and two webinars. This year will, obviously, be very different. Physical events in the first half of 2020 have been postponed or cancelled and we’re increasingly moving toward online events. I took part in two this spring. In April, I was a panellist at the Lloyd’s List Future Fuels webinar alongside Christos Chryssakis of DNV GL and Chris Chatterton of the Methanol Institute. In May, IBIA and S&P Global Platts co-hosted a webinar entitled ‘Bunkering in 2020: Sulphur regulations, oil wars and COVID -19’ featuring market analysis from Jonty Rushforth and Daniel Colover from S&P Global Platts and myself taking about the IMO 2020 experience so far. Thankfully, modern technology has enabled us to continue to do our work and take part in events and meeting, without even having to put shoes on as we dial in from our own homes.
Just before IP Week, I attended PPR 7, a week-long meeting at the IMO with delegates flying in from all over the world, with the exception of China, which had a smaller than usual delegation consisting only of its London-based representatives. PPR 7 was intense, with long working hours, making progress on environmental issues. As IBIA’s IMO Representative, I was expecting a very busy spring and early summer attending several meetings, in particular MEPC 75 and MSC 102. However, due to the pandemic, IMO has postponed all meetings until at least the end of June. At the time of writing, the IMO was conducting an Extraordinary Council session by correspondence to decide on which committee meetings to prioritise once physical meetings can resume.
Since mid-March, it has felt as if the world stood still amid efforts to control the coronavirus, but shipping and the bunker industry have continued to operate, adapting to new ways of working. We are part of an essential industry. Shipping is needed to keep the world’s population supplied with food, energy and other vital goods. Shipping is the engine of global trade and the bunker industry fuels that engine. However, imports and exports of certain raw materials have dipped, as has the flow of manufactured goods. As a result, the second quarter is likely to see a significant impact on global demand for shipping, but there are hopeful signals as many countries appear to be past the peak of infections and have gradually begun to ease restrictions during May.
We don’t know how long it will take before the coronavirus is sufficiently under control to allow for the human activity that underpins the economy to return to normal. We will likely need to adjust to a ‘new normal’ for a while, and accept that it’s business, just not quite as usual.
Unni Einemo, Director IBIA