The COVID-19 pandemic has turned the world economy on its head. “The recession this year will likely be more severe, and recovery in 2021 will be slower than we anticipated two months ago,” says Gita Gopinath, chief economist at the International Monetary Fund (IMF). She believes the global economy will shrink by nearly 5 percent. The maritime industry will be hit especially hard: The global lockdown disrupted major supply chains. Maersk, the industry leader, saw container transports decrease by at least 15 percent during the second quarter. Many international maritime trade shows, like SMM in Hamburg, went virtual or had to be rescheduled.

Seeing many countries reopen gradually is encouraging. China’s economy is stabilizing, and many countries are reopening their borders. But all that does not constitute a return to normality: In many emerging and developing nations, the pandemic hasn’t even reached its peak yet; a situation marked by uncertainties, and an enormous challenge to the maritime industry.

A Renaissance Spurred by Digitalization

“We know we cannot predict the future, but we can try to prepare for changes that are clearly on the cards” said Martin Stopford, president of Clarkson Research. “Not preparing can be riskier and more expensive than the safe option and doing nothing.” The coronavirus crisis forces the maritime sector to open up to new ways of operating, he added.

Innovative digital products are being developed and deployed in record time. “The pandemic has accelerated digitalization in the industry, advancing it by half a decade,” said Knut Ørbeck-Nilssen, CEO of DNV GL. “The crisis has the potential to trigger many innovations and new ideas throughout the entire maritime world, ultimately leading the sector to a renaissance.” DNV GL, the main sponsor of SMM, is a pioneer of remote digital surveys and the use of digital twins and data analytics, which also benefits green shipping.

Suppliers Are Living off Past Successes

Being well prepared is half the battle, says Martin Johannsmann, chairman of VDMA – Marine Equipment and Systems and CEO of SKF: “We are generally in good shape in the sector. That paid off in the corona crisis. We very quickly learned how to respond to the pandemic.” Production continued nearly without interruption, and orders could be completed.

However, German suppliers are living off a 3.4 percent increase in orders received during the past fiscal year. The current, noticeable restraint of buyers is cause for concern. Klaus Deleroi, CEO of the ship gearbox specialist Reintjes, is hoping for support from the federal government. One billion euros has already been earmarked for a ship replacement program, as well as digital projects, cleaner ships, LNG bunkering barges and port-side electricity installations.

Sailing into the Unknown

A look at the global order book reveals that shipyards have been hit hardest by the crisis. Even before the coronavirus, the global order book had shrunk to a low 13 million GT (compare to 2009: 30 million GT). The cruise industry in particular, until recently the envy of the maritime world, is facing turbulent times. To avoid financial distress, MV Werften shipyards, owned by the Malaysia-based Genting group, have received €175 million of government emergency relief. Germany’s government-owned KfW bank has supported Meyer Werft shipyards with €200 million. The market leader in the cruise segment is not expecting any new orders between now and 2023. Current newbuild projects are being delayed to avoid employment gaps.

As for the cruise ship operators, they’d rather reduce their fleets than order new ships at the moment. “It is very likely that some ships in the market will be scrapped,” said Carnival CEO Arnold Donald. The world’s 400 cruise ships have been on involuntary holidays for nearly four months. The result for the segment leader, Carnival, is a monthly bill of $1 billion. Some early excursion attempts–with significantly reduced passenger numbers and a strict hygiene concept–were launched recently by the Norwegian operator Hurtigruten. The million-dollar question, says CEO Daniel Skjeldam, is when normal operations will finally be able to resume. Even “cruises to nowhere,” trips without going ashore anywhere, are being contemplated. One hopeful sign for the cruise segment is the constant flow of incoming bookings for the next cruise season.

Lacking Cooperation Among Governments

Around the world, crews on board merchant and cruise ships are hoping that traveling restrictions will soon be lifted. “In some cases seafarers have been kept on board their ships for months beyond their original contracts. They are directly affected by the failure of governments around the globe to act, and the lack of coordination between them,” said Estelle Brentnall, head of maritime at the European Transport Workers’ Federation (ETF), voicing criticism. She demands: “Let them go home!” Shipowners are doing what they can to find a solution.

Alfred Hartmann, president of the German Shipowners’ Association VDR, described these efforts: “For example, several weeks ago we joined hands with the International Maritime Organization, providing governments around the world with a detailed procedure to enable safe crew exchanges during the coronavirus crisis.”

Many acts of communication, both private and business-related, are currently handled online, but in-person meetings still have value. “It is important to laugh together, have fun and celebrate before you get to business,” said Dirk Lehmann, managing director of the Hamburg-based company Becker Marine Systems and vice chair of SEA Europe.

SMM has been rescheduled to take place in Hamburg February 2 to 5, 2021.