Challenges That Shipping Businesses Face in 2021
2020 was a difficult year for most sectors, and the shipping industry is not an exception. A year and a half into a global health and economic crisis, freight forwarders face a number of challenges, from marine insurance claims and risk of cargo damage to machinery breakdown and delays of servicing of equipment and vessels.
Servicing of Merchant Ships
With physical distancing protocols and lockdown measures still in place, delays of servicing of emergency equipment and merchant ships could endanger crew and offshore staff safety. Ship yards and ports already face delays due to staff in quarantine and shortage of workers. At sites where inspections and statutory surveys are delayed, there is a risk of undetected faults, resulting in compromised safety. Industry experts point that routine inspections are key for identifying ships with faulty equipment. Shortage of workers could also affect incident response operations, resulting in incidents such as grounding, collision, or fire.
Reduced staffing at port facilities and warehouses also increases the risk of damage, fire, and theft, especially in case of prolonged shortages.
Shortage of Spared Parts Causing Delayed Maintenance
Supply chain disruptions may cause delays in maintenance of merchant vessels due to shortage of spare parts. In fact, damage of equipment and machinery is a major cause for incidents onboard ships. Statistics show that about 9,000 out of 26,000 incidents that occurred between 2010 and 2019 were caused by equipment breakdown.
The global crisis hit transportation businesses, air freight, and shippers, resulting in major changes in cargo movement. Cargo stranded in areas without protective measures and security controls is at risk of damage due to extreme temperatures, fire, and delays. In most cases, cargo insurance does not cover damage and loss due to delays, and insurance companies are not responsible for any additional costs resulting from cargo kept in warehouses or discharged short of final destination. Perishable goods such as fruits and vegetables may have coverage for spoilage resulting from a peril. However, insurance does not cover deterioration and loss of value due to delayed or late shipping.
One of the biggest challenges for international freight forwarding businesses is the inability to swap crews, which is important to ensure staff welfare, health, and safety. Major ports across the globe have restrictions in place, with 92 countries prohibiting crew swaps and 120 countries having implemented restrictions on crew changes.
Seafarers play a key role in delivering essential goods like fuel, medicines, and food and enabling global trade and supply chains to keep running. Shipping stakeholders such as industry leaders, governments, and international organizations have issued guidelines and recommendations to ensure that crews have access to medical care, are protected from Covid-19 onboard, and that ports and commercial vessels meet all sanitary requirements. Yet due to protective measures and border closures as well as scarce availability of flights, hundreds of thousands of crew are stranded onboard vessels, and there is no consensus on measures and policies that can facilitate crew swaps and transfers.