Where? When? How much?
Governments’ measures to contain the outbreak of Covid-19 have also had a massive impact on the shipping industry. The market research institute Alphaliner says that 13% of the global maritime fleet has been laid up.
Efforts to contain the Sars-CoV-2 virus continue to trigger bad tidings for large global merchant marine fleets. The latest statistics from the market researcher Alphaliner have 500 freighters that can carry 3 million teu out of action. That’s somewhat more than 13.5% of the global maritime shipping fleet.
Every cargo shipping line in the world is on the lookout for ways in which to keep the impact of efforts to contain the outbreak of Covid-19 as small as possible. The same is the case for every firm in most industries these days. One approach is to ask for state aid or support. Many observers who know the market well are inclined to assume that payments have already frequently been made to shipping lines, above all in Asia.
South Korea has already set aside USD 1 billion for the shipping industry; the Seoul-based shipping line Hyundai Merchant Marine (HMM) is expected to receive a USD 591 million share thereof. The Taiwanese shipping line Yang Ming Marine (YMM), in turn, which registered a net loss of more than USD 27 million in the first quarter of the current business year, is another example of state support. It has already been heavily criticised from various quarters, however, for accepting government support in the course of the ongoing economic downturn.
YMM is a part of the major shipping coalition The Alliance, as are HMM, Hapag-Lloyd and ONE. Without providing any details of the schemes concerned the line pointed out in its latest quarterly report that it has received funds as part of government support measures.
Europe in the same boat, however
In Europe Søren Skou, the chief executive officer of A.P. Moller-Maersk, the wold’s largest shipping line, said in a discussion with the London-based newspaper Financial Times that the European Union has to stand up more strongly for free trade, which includes it raising its voice against government support that has already been granted to certain Asian shipping lines.
Just a few weeks ago, however, it became known through a report released by the news agency Reuters that the French shipping line CMA CGM has now also benefited from state aid. It has been provided with a loan worth approximately EUR 1.05 billion (USD 1.1 billion) by a consortium of banks. The French government has guaranteed the repayment of 70% of the total. Ministers explicitly stated in this context that this guarantee has been designed to help the firm overcome the economic fallout from measures taken to counter the outbreak of Covid-19.
CMA CGM, the third-largest shipping line in the world and headquartered in Marseille, will certainly not remain the last shipping enterprise that attempts to keep its head above water with the help of its home state – despite Skou’s vehement resistance.
Intense debate on pros and cons of state aid
The South Korean shipping line HMM has struck back. It underlined the fact that, in the ongoing crisis, the government really has to ensure that industry receives the commensurate support. In the light of the danger that a country’s most important industries (including the shipping segment) are on the verge of collapse, the line considers this absolutely essential. It is also very important to include all of the links in the supply chain.
The EU itself is in the process of subjecting these issues to the closest possible scrutiny, it said, with a strong focus on the potential restructuring of the World Trade Organization (WTO) and its rules, with a focus above all on loans.
