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The Shipping Industry: Responding and Adapting to a New Reality

Published also in Times of Malta (Click to access the content)

The shipping industry, within the limits of today’s situation, continues to operate and keep crucial supply chains flowing across the globe. Having said this, the outbreak of the Coronavirus (COVID-19) has seen a widespread negative impact on the industry’s operations. It has affected many different aspects of the industry, including the dry bulk, containership, and oil tanker markets amongst others, since international trade activities across the globe have substantially declined to reduce the spread of this novel virus. COVID-19 has wreaked havoc on global shipping, which in the near future, could lead to yet another industry wide crisis in a somewhat already struggling shipping industry.

Several ports and shipping companies have implemented drastic measures which, even though are vital in combatting the virus, have caused severe disruptions within the industry. Governments around the world have imposed strict containment measures resulting in substantially lower global economic growth and consequentially, lower demand for the movement of goods. Since the Malta flag is the sixth largest flag in the world and largest in Europe in terms of tonnage, the local shipping industry has been significantly hit. Therefore, Transport Malta, together with the Government of Malta have introduced supportive measures to reduce this novel virus’ impact on the industry.

Measures adopted by the Maltese Authorities

Following the declaration that COVID-19 constitutes a Public Health Emergency of International Concern (PHEIC), the Maltese Authorities published various legal notices relevant to the shipping industry. In this regard, the Travel Ban Order (L.N 42 of 2020), further updated by L.N 63 of 2020, and L.N 93 of 2020 were primarily issued by the authorities to subdue the virus’ spread. These notices, together with the latest port notices issued by the Ports and Yachting Directorate (Port Notice No 4 of 2020, No 5 of 2020, No 6 of 2020, No 9 of 2020 and No 10 of 2020) have been issued to manage the outbreak, but in so doing, have affected local shipping activities such as cruise liners, cargo ships, offshore supply vessels, bunkering operations, and ferry services amongst others.

The primary notices published limited activity through the introduction of stringent operational limitations on shipping and yachting activities around Maltese ports and marinas, including a temporary ban on the entry of cruise liners and passenger ships into Maltese ports and territorial waters. Having said this, the aforementioned bans shall soon be subdued as the Prime Minister recently stated that Malta’s ports, which have been closed since March, will re-open on 1st July 2020 with simple protocols to follow with the aim of not scaring off tourism. Therefore, the below measures shall definitely remain applicable until 1st July 2020, whilst the industry may only attempt to decipher what specific measures shall survive the re-opening of the ports.

In effect, the recently published Port Notice No 10 of 2020 has already relaxed several restrictions affecting vessels departing and arriving in Malta by providing a framework of protocol for vessels that have been cleared to obtain maritime support services in Maltese waters and ports. Notably, the notice affords discretionary power to the Superintendent of Public Health  to decide, on a case by case basis, whether: i) to allow vessel maintenance requests; ii) to exempt from the travel ban any travel for repatriation or in connection with ship operations, and iii) to allow entry of fishing vessels during tuna season. More recently, the Superintendent of Public Health has also notified that, effective from 5th June 2020, the travel ban to and from Malta shall no longer apply to transiting yachts seeking to berth in Malta with solely crew onboard, from countries outside Malta, for the purposes of repairs, refuelling, servicing, flagging, customs procedures and other ancillary necessities.

The Merchant Shipping Directorate has also issued three legal notices specifically addressed to shipowners, ship operators, managers, masters, owners’ representatives and recognised organisations. The Directorate, through Merchant Shipping Notice (MSN) 157, has urged all parties concerned to take the necessary precautionary measures, as well to remain vigilant and always adopt good hygiene practices. The Directorate also advised all parties forming party of the shipping cluster to refer continuously to the World Health Organisation (WHO) advisory reports for the purposes of risk assessment, to take the necessary precautionary measures and to be aware of the latest WHO information regarding this disease and its impact on the industry.

In furtherance of the above, recognising that Malta-flagged vessels were facing certain challenges, the Directorate released MSN 158 to alleviate three main issues which it became aware of following the COVID-19 outbreak. The Directorate has stipulated that shipowners, managers and operators encountering difficulties in repatriating seafarers following the expiration of the term established in the seafarer’s employment agreement, may, on a case-by-case basis request to extend the validity of the agreement for a maximum period of three months. Should the situation remain the same, the period may also be extended for further periods upon application. Additionally, seafarers in possession of a certificate of competency issued by an administration other than Malta and who are in possession of a flag state endorsement which may expire during an extended period on board, may request the Directorate to extend the validity of their flag state endorsement. Lastly, the Directorate shall also consider requests for an extension or postponement under force majeure or unforeseen exceptional circumstances, where surveyors, auditors and/or inspectors are not able to undertake scheduled surveys, audit and inspections due to restrictions imposed by COVID-19.

Subsequent to the outbreak of COVID-19 and the primary measures introduced in March, the pandemic continued to cause financial problems to industry players who found themselves facing serious cash flow problems. Thus, the Directorate issued further measures by means of MSN 160, implemented as from 1st of April 2020, in which it has deferred the payment dates of registration fees and annual tonnage tax of merchant ships falling due on or after 1st April 2020 by a period of three months from the respective anniversary.

In lieu of the above, it is evident that authorities and industry players, both locally and at European level, have attempted to undertake preventive action with the aim of containing the spread and consequent negative effects of COVID-19, whilst nonetheless attempting to stabilize and safeguard the shipping industry’s future which has been cast in doubt as a result of these turbulent times. In effect, it may be garnered that the measures implemented by authorities across the board, portray a certain level of wariness and hesitation to take a proactive approach in this regard as they continue to evaluate the overarching impacts of COVID-19 on the globalisation-dependent industry. The forthcoming re-opening of Malta’s ports provides a welcomed update to the current situation, and the effects of such re-opening will be evaluated in order to allow further relaxing measures to be put in place. Having said this, whilst  it is difficult to make short-term forecasts for the industry, one may foresee that a more proactive approach by both industry players and authorities, as for instance the increased uptake of remote technologies and use of automation, may allow the industry the opportunity to recover and strive post COVID-19.

Authors: Dr. Marlon Borg, Dr. Edward Meli, Dr. Andrew Massa

Photo: DFA

 

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