Business

BIMCO: Coronavirus impacting the global shipping industry

While it is still early days in the virus outbreak, the implication for the shipping industry is clear – demand and freight rates are falling, says Chief Shipping Analyst.

Published

7 years ago

February 7, 2020

Admin

Peter Sand, Chief Shipping Analyst at BIMCO, on Thursday (6 February) published an article where he highlights the implications of the coronavirus outbreak on the shipping industry on a global scale:

The outbreak of the novel Coronavirus has dented market sentiment and spooked markets around the globe. When China sneezes, we all catch the flu. This especially holds true for the commercial shipping markets, which remain heavily reliant upon China, both on the import and export side.

The virus spread coincides with the Chinese Lunar New Year (CNY), which marks the traditional low season for shipping markets. Thus, the virus’ knock-on effects have been hard to single out so far with next to no hard facts and figures to substantiate the matter. However, it does remain abundantly clear that an extended shutdown of China will temporarily cripple the shipping markets and hit hard on freight rates.

Every week that China remains “closed” will mark a slowdown of economic growth. Seaborne trade is closely linked to economic developments in Asia and the effects are already felt in several different ways.

Still early days

While we are probably still in the early stages of the outbreak, it is evident that this health crisis will put a drag on Chinese economic growth in the first quarter of 2020, potentially taking a toll on annual GDP growth as well.

Consumer spending, associated with CNY celebrations, has certainly taken a substantial hit. This dip in consumption cannot necessarily be made up for once the virus has been contained. The lock down of large parts of the transport system has limited the consumption of oil, and refiners have cut crudes runs across the board. Demand lost because of this is unlikely to return to boost shipping demand after the crisis is over.

Advanced Economies’ imports of manufactured goods from China remains the main driver of container shipping with seven out of the ten largest container ports located in China. Wide-spread factory shutdowns results in a slowdown of manufacturing and industrial production. The intra-Asian container shipping market, the largest in the world, will be the first trades to feel the fallout from the coronavirus if intra-Asian supply chains are disrupted. Secondly, the long-haul trades to North America and Europe will be affected.

Extended blanking of sailing (meaning cancellations, ed.) by global liner companies have been the first measure taken to ease the pressure of low demand. But if goods are not produced at all, the short-term alternatives do not exist. Medium term alternatives will rise fast though, meaning alternative producers of the goods, just as we have seen as an effect of the ongoing trade war between the US and China.

Aside from stepping up their efforts to contain the virus, the Chinese government has also rolled out fiscal stimuli to combat the economic impact from the coronavirus. If judged by the share prices on the stock exchange, it’s working. But it is not limiting the spread of the virus nor is it boosting shipping demand at present.

Quite a few countries have already started to implement measures to curb the virus spread from seafarers. On 3 February 2020, Australia introduced a 14-day limit for port calls in mainland China and Australia, de-facto quarantining seafarers onboard the ships. Singapore has since then followed suit.

The virus illustrates just how dependent the world has become upon China with many supply chains deeply embedded into the country. Anecdotal evidence suggests that South Korean car manufacturers have started to reduce output due to supply shortage of Chinese goods.

Dry bulk plummeting into negative territory

Dry bulk shipping rates have extended its route over the past two months, driven largely by seasonality and the newly implemented IMO2020 Sulphur Regulation, which has sent fuel oil costs soaring. Chinese imports of dry bulk commodities are the main driver for the dry bulk market and with a slowdown of industrial production in the short-term, the outlook for Q1-2020 is not shaping up particularly well. Freight rates will stay low, until Chinese merchants get back into the market for the usual commodities, such as grain, coal and iron ore.

The traditional dry bulk low season is usually in Q1, and the market tends to rebound post-CNY. Yet, with the coronavirus not under control yet, the slump will inevitably be more protracted. The Capesize index fell into negative territory on 31 January 2020 and has continued its descent to reach -133 index points on 4 February 2020. If large parts of China remain under quarantine, it is likely that earnings will continue to drop across the dry bulk segments.

Shipyards – newbuildings and retrofits

China also holds a significant share of the global shipyard industry. Data on newbuilt deliveries for January 2020, doesn’t seem to be impacted. But for the coming months, BIMCO expects to see an effect. This goes for retrofits of scrubbers, ballast water treatment systems etc. as well.

An oil tanker market turned on its head

Tanker shipping has certainly felt the heat in the past week, partly from the virus, but also with the lifting of US sanctions for a lot of Chinese-owned oil tankers. A lot of the oil tanker business is carried out in the spot market and freight rates have already seen substantial changes.

China is the largest crude oil importer in the world with a staggering 506 million tonnes of crude oil imported in 2019. A shutdown of China will bring with it a transitory slump of crude oil imports and accompanying refinery cuts in run rates. Such cuts have already been taking place in extent to the seasonal CNY cuts of crude runs.

The market has been turned on its head in a single month, where VLCC earnings from the Middle East Gulf to China has dropped from USD 103,274 per day on 3 January 2020 to USD 18,351 per day on 3 February 2020.

The outbreak has sent the oil prices on a rapid decline over the past month too and rumour has it that the Organization Of the Petroleum Exporting Countries (OPEC) is scheduling an emergency meeting in February to discuss production cuts in an effort to establish a floor under the dipping prices (Source: The New York Times).

How does it affect the US-China “Phase One” agreement?

In the 15 January-signed US-China “Phase One” trade agreement, China pledges to buy an additional USD 200 billion of US goods over a two-year period, of which a lot of energy and agricultural products will be seaborne. It remains questionable whether these purchases will ever see the light of the day, and the virus outbreak could prove to be an additional hindrance to this Chinese pledge. White House economic adviser Larry Kudlow has said that the “export boom” of US commodities will be delayed as a result of the virus.

The short-term consequences remain clear

As the virus continues to spread, it remains immensely difficult to forecast the medium to long-term implications, yet the short-term consequences are clear: demand and freight rates are dropping.

With past epidemics, the markets have rebounded sharply in a matter of months, so the question is essentially about how long China will stay locked down in a quarantine?

Photo credit and source: BIMCO
Published: 7 February, 2020

Legal

Singapore police arrest eight over alleged illegal MGO transaction off Tuas

SPF says preliminary investigations found that crew members of a Singapore-registered tugboat misappropriated MGO worth about SGD 10,570 without their company’s knowledge and sold it illegally.

Published

1 hour ago

August 14, 2026

Admin

Singapore police arrest eight over alleged illegal MGO transaction off Tuas

The Singapore Police Force (SPF) on Thursday (13 August) said it has arrested eight men, aged between 25 and 54, for their suspected involvement in an illegal transaction of Marine Gas Oil (MGO).

On 13 August 2026 at about 1.05am, officers from the Police Coast Guard (PCG) conducted a check on a Singapore-registered tugboat in the waters off Tuas and discovered that eight crew members were possibly involved in the illegal transaction of MGO.

“Preliminary investigations revealed that the crew members of the tugboats misappropriated MGO valued at about SGD 10,570 (USD 8,258), without their company’s knowledge,” SPF said in a statement.

“The MGO was sold illegally for their personal financial gain.”

The eight crew members will be charged in court on 14 August 2026 with the offence of theft by servant of property in possession of master under Section 381 of the Penal Code 1871 If convicted, they shall be punished with an imprisonment term that may extend to seven years and shall also be liable to fine.

“The Police take a serious view of illegal transaction of MGO in Singapore Territorial Waters and will continue to conduct enforcement and security checks to prevent, deter and detect such illicit activities in Singapore waters,” SPF added.

Photo credit: Singapore Police Force
Published: 14 August, 2026

Port & Regulatory

Gard: Sulphur-related bunker claims rise amid tighter China MSA enforcement

Claims involving excessive sulphur content in marine fuels have been rising, while stricter inspections by the China MSA have heightened the focus on sulphur compliance, particularly in the Bohai Sea.

Published

1 hour ago

August 14, 2026

Admin

Maritime protection and indemnity (P&I) club Gard on Wednesday (12 August) highlighted that claims involving excessive sulphur content in marine fuels have been rising, while stricter inspections by the China MSA have heightened the focus on sulphur compliance, particularly in the Bohai Sea:

Rise in off-spec sulphur claims

Recent claims experience indicates that bunker quality continues to pose a significant operational risk for shipowners. In our earlier review of bunker-related claims during the first five months of 2026, we highlighted a rise in off-specification bunker incidents amid increased pressure on global fuel supply chains following the escalation of the conflict in the Middle East.

Specifically for Sulphur compliance, between January and June 2026, the number of sulphur-related cases increased by more than threefold compared with the same period in 2025. Notably, the number of cases recorded in the first six months of this year has already exceeded the total number reported during the whole of last year by approximately 40%.

While each case is fact-specific, the increase is notable because excessive sulphur content constitutes a MARPOL compliance issue. Unlike many other bunker quality problems, sulphur non-compliance identified through port state inspections can result in vessel delays, enforcement action, and substantial costs associated with debunkering and fuel disposal.

The map below illustrates the geographical distribution of sulphur-related claims recorded during the first six months of 2026, based on the location where the bunkers were stemmed.

Distribution of sulphur related claims

China MSA steps up sulphur compliance enforcement

According to our correspondent, Huatai, on 5 June 2026, the maritime authorities of Tianjin, Hebei, Liaoning and Shandong jointly launched a special campaign on ship pollution prevention and control in the Bohai Sea region. The campaign involves coordinated supervision by local MSA branches across the region and is expected to last nearly five months. It covers major ports and surrounding port areas in the Bohai Sea region, including Tianjin, Tangshan, Qinhuangdao, Huanghua, Jinzhou, Yingkou and Longkou.

While the initiative is broader than bunker sulphur compliance alone, its scope includes inspections relating to air pollution prevention, SOx emissions, fuel compliance and other high-pollution-risk operations. Enforcement measures are expected to comprise onboard inspections, cross-regional enforcement activities, unannounced spot checks and remote monitoring. These efforts will be supported by a combination of UAV patrols, maritime patrol vessels, shore-based monitoring systems and rapid on-site fuel testing.

As a result, vessels trading in the Bohai Sea region may experience increased scrutiny of fuel compliance documentation, fuel sampling records, onboard fuel management procedures, and the handling or disposal of suspected non-compliant fuel.

Documents typically requested by China MSA

Based on our recent experience, including the case discussed above, and subject to the specific requirements of the local MSA office, owners and operators may be requested to provide supporting documentation such as:

Bunker documentation – Bunker Delivery Notes (BDNs), MARPOL fuel sample records, fuel test reports, and relevant fuel quality certificates.
Statutory certificates – including the International Air Pollution Prevention (IAPP) Certificate and International Oil Pollution Prevention (IOPP) Certificate.
Operational records – engine logbooks, deck and navigation logbooks, Oil Record Book entries, and records relating to fuel transfers, storage and consumption.
Sampling documentation – the Master’s statement and any records demonstrating how fuel samples were drawn, sealed, labelled, handled and retained.
Correspondence records – communications with the authorities, bunker suppliers, charterers and other relevant stakeholders.
Fuel disposal records – approved disposal plans, debunkering documentation, receipts and evidence of final disposal, where applicable.

The exact documentation required will depend on the nature of the investigation, the findings of the inspection, and the requirements of the local enforcement authority.

Possible regulatory consequences in China

Under the Air Pollution Prevention and Control Law of the People’s Republic of China, ocean-going vessels are required to use fuel oil meeting atmospheric pollutant control requirements after berthing. Vessels operating within designated emission control areas must also comply with applicable emission standards. Article 106 provides that where vessel fuel oil fails to meet applicable standards or requirements, the competent maritime authorities may impose fines ranging from RMB 10,000 to RMB 100,000. Liability may extend to shipowners, ship operators and ship managers depending upon the circumstances of the case.

Recommendation

Sulphur compliance should be treated as both a fuel quality and regulatory risk. Owners and operators are encouraged to take preventive steps before bunkering, act promptly if non-compliant fuel is suspected, and preserve evidence carefully if an inspection or claim arises. Under amended

Resolution A.1206(34), Appendix 18, 2.1.5, if the BDN shows compliant fuel, but the master has independent test results of the fuel oil sample taken by the ship during the bunkering which indicates non-compliance, the master may document this by notifying the ship’s flag Administration, with copies to:

the competent authority of the relevant port of destination,
the Administration under whose jurisdiction the bunker deliverer is located,
and to the bunker deliverer.

Photo credit: shraga kopstein on Unsplash / Gard
Published: 14 August, 2026

LNG Bunkering

Shell expands LNG bunkering footprint in Spain with Valencia

As one of the region’s key maritime hubs, the company said Valencia expands the options available to shipowners seeking LNG supply along major shipping routes.

Published

1 hour ago

August 14, 2026

Admin

Shell expands LNG bunkering footprint in Spain with Valencia

British oil giant Shell on Thursday (13 August) said Valencia has joined its growing network of bunkering locations, making LNG available as a marine fuel.

The successful completion of the first LNG bunkering operation in Valencia marked an important milestone for Spain and further strengthened Shell’s LNG supply capabilities across the Mediterranean.

In a video shared by the company, bunkering vessel Alice Consulich was shown supplying an undisclosed volume of LNG to the container ship MSC Sabrina.

“As one of the region’s key maritime hubs, Valencia expands the options available to shipowners seeking LNG supply along major shipping routes,” Shell said in a social media post.

Shell said the achievement reflected the strong collaboration across the maritime value chain, including MSC Mediterranean Shipping Company, the Port of Valencia and Fratelli Cosulich Group.

“We look forward to making more LNG bunker deliveries in Valencia and across the Mediterranean as LNG infrastructure and capabilities continue to expand,” the company said.

Photo credit: Shell
Published: 14 August, 2026