As COVID-19 pandemic continue to wreck havoc across different industries, shipowners are now taking steps and measures to control their operating costs in order to stay in business. One of the options they are eyeing in is to lay-up their vessels.
According to the classification society, Lloyd’s Register, the volume of lay ups already in place are not seen since the global financial crisis of 2008. Container ships and cruise ships are among the first maritime sector to lay-up.
“Cargoes carried on container ships are set to fall 10% this year – the largest decline in this sector’s 64-year history. The global container ship fleet faces similar turbulence with container lines forecast to post billions in collective losses this year. Hundreds of scheduled services were cancelled over March and April, with more set for May. There are reports that some 10 percent of the fleet is already idle.” the report states.
The LR noted that most container ships and passenger vessel owners are looking at hot or warm lay-up options which allow a vessel to be quickly reactivated and put to service within 24 hrs to a week.
Most applications are reportedly for warm lay-ups. This is in anticipation of easing lockdowns and restrictions and thus, restarting the global economy again.
Notably, major carriers announced defensive stance on operating costs and continue to observe the shipping market in the coming months and the possibility of putting more vessels in lay-up.
Japan’s Mitsui OSK Lines (MOL), one of the world’s largest shipowners, recently announced measures to deal with financial issues due to the coronavirus outbreak. In March, Wallenius Wilhelmsen announced plans to place up to 10 vessels in cold lay-up and another 4 for demolition.
“Whether lay-ups are greater than 2009 when numbers surpassed 1,000, is uncertain; many owners don’t immediately confirm the status of their ships. But already there are indications that the COVID-19 presents greater challenges for seaborne trade, suggesting that lay-ups will become a feature dominating shipping over 2020“