European shipowners: Investments in making fleet greener will no longer be possible after COVID-19

Investments in the reduction of air emissions from ships would no longer be possible in a post coronavirus world, European shipowners said in a new survey.

European shipping is facing a critical moment in the face of the current COVID-19 pandemic. Shipping companies, charterers, operators, shipowners, crew as well as onshore staff are all dealing with mounting difficulties in continuing their operations. To better understand the economic impact of the pandemic on the industry and to assess the impact of EU and national measures put in place to alleviate the situation, the European Community Shipowners’ Associations (ECSA) conducted a survey in April 2020 among its members’ companies.

The survey report shows severe economic impacts of the pandemic on European shipping.

In general, the European shipping industry does not expect a return to the pre-crisis level of activity in the course of 2020.

In line with this sentiment, 44 per cent of respondents believe they will no longer be able to invest in greening their fleet.

On the other hand, 30 per cent of respondents think it would still happen but to a lesser extent, while 26 per cent expect the investments in the reduction of air emissions to return to the same extent as planned prior to COVID-19.

“This is a major setback for the industry, which is fully aligned with the IMO’s 2050 CO2 reduction targets, and has since the new European Commission took office been supportive of the EU’s ambition to be the world’s first carbon-neutral continent,” ECSA pointed out.

When it comes to investments in fleet renewal, more than half shipowners will not be renewing their fleet. Only 11 per cent of respondents think such investments would return as planned prior to COVID-19, while 37 per cent anticipate that these would be made but to a lesser extent.

With regard to employment, more than half of companies maintain a positive outlook on returning to pre-crisis level of employment in 2020.

With the exception of the tanker segment, the overall shipping industry is facing significant immediate losses.

The worst-hit segments are ferries, cruises, car carriers and offshore service vessels. The turnover decrease reached higher than 60 per cent. On the other end of the spectrum, tankers saw an increase in their turnover in March 2020.

Respondents signalled that some recovery is expected in the rest of the year compared to the immediate economic impact, however turnover losses remain significant throughout the industry – except for the tanker sector.

The employment of seafarers and office personnel follows very similar patterns with a sharp decrease of seafarers in the most impacted segments and less so for office personnel. While companies are able to tap into national schemes for their onshore staff, the national schemes for seafarers apply only to nationals, leaving out other nationalities, according to the report.

“One of the less reassuring results that emerged from the report is the lack of national, regional or local measures put in place against liquidity issues or that these are not applicable to the shipping industry,” ECSA said.

“In the case where measures exist, banks do not offer those options in practice; and when they do, the administrative burden and costs outperform the benefits.”

A worrying trend is that the hardest-hit segments most in need of financial assistance are the ones not receiving them, the association stressed.

The survey found that different segments need different types of support. In general, EU and national supports are equally sought by shipping companies.

Nearly 80 per cent of respondents highlighted crew changes as the most urgent issue that needs support, followed by financial issues, then by the validity of certificates of seafarers, and of ships, followed lastly by the support on employment.

In terms of financial support, the shipping industry prioritizes the support to refinance its loans portfolio.

This is closely followed by the support for the greening of the fleet and the retention or return of personnel/seafarers. The support for the investment in fleet renewal is ranked last.

Founded in 1965, ECSA promotes the interests of 20 members associations in the EU, the UK and Norway. Together with EU and national policymakers, ECSA strives for a regulatory environment that fosters the international competitiveness of European shipping.