Page 16 - Annual Review 2020

Indian National Shipowners’ Association
The possibility of foreign offshore assets flagging into India on a temporary basis to bag contracts and then reflagging out of India at the end of the contract continues to be a concern. This reduces the employment opportunities of Indian offshore assets.
Dredging industry
Dredging continues to be an important industry as volumes of global trade increase and more goods are shipped through the sea using large vessels or ships. For this purpose, dredging is required to keep ports working. Therefore, there is a strategic dimension to the dredging business.
However, the refusal by ports to follow standard contracts for dredging has among other issues, led to several Indian companies facing shut down in businesses.
The Dredging Corporation of India (DCI), seems to be on track with stronger relationships with Major Ports.
The perennial problem of the Indian dredging sec- tor is that foreign dredging companies continue to dump prices resulting in Indian companies facing unfair competition. While this is good news for the ports, Indian dredging companies who have higher operating costs have to bear the brunt.
As a result, the Indian dredging fleet has seen no growth in the last two years.
WORLD ECONOMY AND
FACTORS THAT INFLUENCE
SEA TRADE
World Economy
The Covid-19 pandemic has led to a very sharp ‘shock’ to the world economy. The lockdowns and restrictions aimed to control the virus from spread- ing created a deep global recession. From the Q3 2020 there have been improvements.
Global GDP projections for full year 2020 have av- eraged around -4.5% since mid-year, which rep- resents the steepest contraction for over 70 years. However, it seems that whilst the initial economic impact was significantly more than the global finan- cial crises of 2008, the initial bounce back appears to have been quicker than in 2009, according to Clarksons’ Research.
Nevertheless, material risks to the outlook still clearly remain.
Seaborne Trade
Impacts from the Covid -19 pandemic have become
the primary driver of trends in global seaborne trade this year. The cargo volumes are currently project- ed to decline by 4.0% in 2020 to 11.4bt.
This is a contraction comparable to that seen in the wake of the global financial crisis (trade fell by 4.1% in 2009). However, significant regional and monthly complexities besides huge swings in volumes have been evident. While the initial shock to seaborne trade was estimated to have been severe, the pres- sure on trade volumes has been easing back since late Q2 2020, with improvements most prominently in Asia.
Global seaborne oil trade is projected to decline by 6% in full year 2020. The Covid-19 pandemic has had dramatic effects on the oil sector, with global oil demand and refinery throughput both projected to fall by 8% in the full year, and major oil producers having implemented significant output cuts from May 2020. Against this backdrop, crude oil trade is projected to fall by 5.6% this year despite recent firm imports into China. Meanwhile, oil products trade is projected to decline by 6% this year. While global oil demand has been improving, the rebal- ancing of the oil market is expected to take time, with high inventories expected to continue to exert pressure on trade into 2021.
Overall, it appears that the worst impacts of Covid -19 on seaborne trade may now have passed, and improvements are starting to filter through in some sectors, more quickly than initially expected in some cases. Projections for 2021 suggest that seaborne trade may ‘bounce-back’ relatively firmly, to exceed the 2019 level next year. However, uncer- tainty remains, according to Clarksons Research.
Maritime Business
At the start of 2020, the combined tonnage of the world merchant fleet stood at 1.97 billion DWT.
As of 1st January 2020, the top five ship owning economies (in terms of DWT) were Greece, Japan, China, Germany and the Republic of Korea with combined controlled fleet tonnage of 1.12 billion DWT – representing 56.85% of world merchant fleet tonnage.
The top five flags of registration were Panama, Mar- shall Islands, Liberia, Hong Kong and Singapore representing 59.74% of world merchant fleet ton- nage. India stands at 18th rank representing 0.84% of world merchant fleet tonnage in DWT terms as on January 1st 2020 according to Institute of Ship- ping Economics and Logistics.
As of 1st January 2020, the largest shipbuilding countries were China, South Korea, and Japan ac- counting for 80% of the world order book in terms of Gross Tonnage (GT).
16