COVID-19: Shipping Industry's Uncharted Course Facing A Novel, Systemic and Long-tail Risk

Updated: Apr 22

At the front lines of international trade, the shipping industry was handed yet another risk to deal with, at a time when OPEC embarked on a oil price war, competent political leadership worldwide is a very precious commodity and calls for accountability and transparency will are getting stronger by the hour


The team of Karatzas Marine Advisors & Co has been extensively and carefully following developments with COVID-19 and its impact on the maritime industry and the supply chain. COVID-19 is a novel risk that the world has never seen before, at least in modern times; the risk is unprecedented, the outcome yet unknown, but we can bet that this is a business model disruptor and game-changer.


As we work on a series on COVID-19 and the maritime and shipping finance industries to be published in the next few months, we summarize in this post a few recent pertinent articles and interviews on the subject for several publications:


On April 15th, 2020, Freightwaves / American Shipper hosted an extensive interview on COVID-19 and its implications on the shipping industry. Mr Greg Miller, shipping's authoritative and skillful pen, discussed in length with Mr Basil Karatzas on the impact of COVID-19 on several market sectors of the shipping industry, on disruptions of shipping operations, prioritizing COVID-19 over IMO2020 and other ESG goals, impact on shipping asset appraisals and values and possible loan-to-value breaches, and likely outcomes for shipping finance activity, ranging from a new wave of defaults and restructurings to tightened terms of financing at the face of this novel risk.


The full interview, titled "How coronavirus ‘stress tests’ will change ocean shipping" can be read here!


We are thankful to Greg Miller and Freightwaves / American Shipper for the extensive interview and for trying to put COVID-19 into a perspective for the shipping industry.


The March / April 2020 issue of The Maritime Executive Magazine features a lengthy article on COVID-19 and shipping, expertly written by the magazine's Senior Editor, Mr Jack O'Connell. Mr Basil Karatzas has been featured in the article, titled "Quarantinied". "The financial markets are getting tighter as we move from 'cash is trash' to 'cash is king' mode; investors have become tight-fisted, and shipping loans and debt, typically low quality, have suffered the most as there is a pronounced flight to quality", Mr Karatzas stated in the Maritime Executive article.


The article, titled "Quarantinied" can be read here, and the March / April issue of The Maritime Executive Magazine can be accessed by clicking here!


We are tankful to Mr Jack O'Connell and The Maritime Executive for seeking our professional opinion in these unsettling times.


On March 17, 2020, almost a month ago and when COVID-19 was just starting making the front lines in the United States, The Diplomat, hosted an interview with Mr Basil Karatzas on the impact of COVID-19 and shipping. As a current-affairs magazine covering the Asia-Pacific region, coronavirus (as the virus was known back then) was very familiar to the editors by then, having run havoc in People's Republic of China starting from January and throughout the Chinese New Year (CNY) celebrations in mid February. The interview reflects the novelty of the topic yet in the West, and the still to be discovered knowledge of general and medical information to be sourced.


The article, titled "COVID-19: Impact on Global Shipping and China’s Economy " can be read here!


We are thankful to Ms Mercy Kuo and The Diplomat for hosting the article and our professional opinion.


On March 17, 2020, National Public Radio (NPR) had a story on COVID-19 and shipping titled "Coronavirus Wreaks Havoc On The Global Shipping Industry" with Ms Jackie Northam. Mr Basil Karatzas was interviewed for the story, and the article can be found online by clicking here!



Our thoughts, prayers and gratitude are with the people on the front lines, the people who do not have the luxury to lay back and casually hashtag #StayHome but who have to work to ensure that people in medical need are taken of, that our civilized society keeps functioning (although some doubts can be raised on the 'civilized', unfortunately), that our daily food (and occasionally truckloads of TP make it to supermarket shelves!), that ships keep plowing the oceans (although seafarers and sailors seem to be treated as forced labor with diminished human rights.


We all have to live COVID-19 and drastic changes to daily lives and ways of doing business are abreast. As the situation develops, the team of Karatzas Marine will be hosting more articles and information on the subject.


And, we profoundly hope that COVID-19 will bring out the best in each and every one of us, in terms of civility and humanity, perseverance and determination, pro-activity and leadership skills for innovation logic (as opposed to management logic), novel risk management and 'iterative, agile problem-solving'.



© 2018  - present Karatzas Marine Advisors & Co.   All Rights Reserved.

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