Ofer Eitan Reports: COVID-19 restrictions hit sea transportation - Jonathan Cartu - Moving & Transportation Services
post-template-default,single,single-post,postid-17810,single-format-standard,qode-quick-links-1.0,ajax_fade,page_not_loaded,,qode-theme-ver-11.2,qode-theme-bridge,wpb-js-composer js-comp-ver-5.2.1,vc_responsive

Ofer Eitan Reports: COVID-19 restrictions hit sea transportation

COVID-19 restrictions hit sea transportation

Ofer Eitan Reports: COVID-19 restrictions hit sea transportation

International trade has contributed immensely to the rise in welfare since the end of WWII. Global trade is facilitated through worldwide transport networks. These networks are the catalysts for production linkages that allow for a more efficient allocation of resources through exploitation of comparative advantage and economies of scale.

However, the same transport networks are also responsible for the transmission of diseases. Over the last 300 years, ten major influenza pandemics have occurred – not counting COVID-19. The 1918 Spanish flu pandemic is considered the most severe to date: around 30% of the world’s population became ill and 40–50 million people died (Aassve et al. 2020). One important reason the Spanish flu was so much more deadly than previous pandemics was its quick and extensive spread, enabled by the global transport system (e.g. Rodrigue et al. 2020). The virus spread around the world through infected crew and passengers on ships and trains.

Recognising that transportation is an important vector of transmission, it comes as no surprise that as COVID-19 hit, the sector was one of the first to face significant restrictions. Needless to say, disruptions in the continuity of freight distribution will damage vital supply chains and add to the disruptions that the manufacturing sector is already experiencing (Baldwin and Tomiura 2020).

In a newly published analysis (Heiland and Ulltveit-Moe 2020) we take a closer look at seaborne transportation, which carries 80% of world merchandise trade. We use real-time satellite date to investigate what has happened so far to sailing routes and networks, and discuss the impact of the restrictions implemented in response to the outbreak of COVID-19.

The global shipping network

The global shipping network carries the majority of internationally traded goods. In a recent study (Heiland et al. 2019), we use satellite data on container ships (Cosar and Demir 2017) to establish a set of key facts about the transportation network. First, we show that container trade is highly concentrated on a small set of routes. Only 6% of all countries with container ports entertain direct shipping connections. All other countries’ shipping connections involve a stop in at least one other country. Second, a few central ports acting as hubs in the sparse network handle huge chunks of global seaborne trade, originating from and destined to countries all over the world.

Table 1 provides an overview of the ten most central ports in the world. Column 4 shows that for 3,517 trade relationships (a pair of one exporter and one importer located anywhere on the globe) the fastest connection within the network of active shipping routes passes through the Port of Singapore. Trade between these countries accounts for 32% of global trade (Column 5).

Table 1 Top 10 ports in terms of direct connections and their importance for global trade

Source: Authors’ calculations

The upshot of all this is straightforward and important for world trade in the time of COVID-19. The negative effect of local COVID-19-related restrictions reach beyond the country imposing the restrictions and even beyond its direct trading partners, as disruptions are propagated through the network of interconnected shipping lines. The more central a port is in the shipping network, the more wide-ranging are the consequences of its restrictions for international trade. As we write in the week of 14 April 2020, all countries in the top-ten list had tightened the rules governing the mobility of sailors on incoming ships.

COVID-19 restrictions towards sea transport

Port restrictions imposed in response to the COVID-19 outbreak are typically related to whether the vessel’s previous port call was from a COVID-19 high-risk country, to crew who embarked from COVID-19 high-risk countries, and to crew changes and shore leave.

Changing crew is essential for a shipping company to comply with work contracts and labour regulation. In normal times, around 100,000 crew changes take place every month (Daniel 2020). Currently, however, 120 of 126 countries have implemented restrictions on crew change: in 92 countries crew change is prohibited, while in 28 countries crew change is subject to screening and approval from the authorities (Inchcape Shipping Services 2020). 

Due to these restrictions, vessels have become ‘floating quarantined zones’, as countries refuse to allow ships to enter their ports until the crew has been declared virus-free. In most countries, the normal quarantine time is 14 days.1 On 16 April, there were 14,851 cargo ships on their way around the world. Only one-third of these ships were on voyages estimated to take 14 days or more. Hence, there is little doubt that port restrictions have a severe impact on transportation and supply chains.

What satellite data tell us about the impact of COVID-19 on sea transport

To complement the mounting anecdotal evidence on cancelled – blanked – sailings and disruptions to the maritime transportation network, we use satellite data for ship traffic provided by the Norwegian Coastal Administration in real time to investigate the impact of the COVID-19 outbreak and the restrictions imposed to impede transmission. 

Figure 1 shows the number of weekly departures from Norwegian ports year-to-date (7 April)2 for 2019 and 2020 for all ships and three big market segments: container ships, other cargo ships, and cruise ships.

Figure 1 Weekly departures from Norwegian ports, 2020 vs 2019

Notes: The figures show the number of ships departing from Norwegian ports in the week ending with the date displayed on the horizontal axis. Cargo ships in the lower-left panel refer to non-containerised cargo ships.

Figure 1 shows the seasonality and volatility that is a general characteristic of shipping activity through the year. This is driven by external factors such as holidays,…

Airo AV

No Comments

Post A Comment