How the Pandemic Has Impacted Shipping in the Caribbean
The impact of the COVID-19 pandemic has been at every level of the Caribbean economy, from hotels and resorts to construction and real estate. But what about the shipping industry? As the movement of goods becomes even more essential, it’s been a challenge for the region’s industry. To learn more, Caribbean Journal Invest talked to Steve Keats, vice president at leading Caribbean shipping firm Kestrel Liner Agencies.
How has the pandemic affected shipping and cargo in the Caribbean
Insofar as our Kestrel global business is concerned, with much of our shipping coming from Asia, Latin America and Europe, the lead times are longer than from Florida and we are now seeing a decline in cargo volumes. Carriers serving from South Florida have seen more of a quicker drop off.
Three of these shipping lines have had to rationalize their services, to the extent that they are sharing space on only a few ships. Seaboard Marine, Crowley Liner Service and King Ocean Lines have filed a special arrangement with the USA Authorities (Federal Maritime Commission) to have anti-trust immunity to coordinate rationalization. Tropical Shipping on the other hand, Kestrel’s strategic alliance partner for Global cargo is maintaining their stand-alone service to the Bahamas, Western Caribbean, Guianas and Lesser Antilles, which gives customers confidence.
For shipping and cargo, is the Caribbean in a worse situation than other parts of the world?
Since the majority of the region is so dependent on tourism, the knock-down effect is significant. There is less demand and there will be less supply of space until tourism can re-open.
I don’t think we have seen the worst of it; and the second and third quarters will continue to slide. Shipping lines are reporting volume declines exceeding 25 percent or more.
The world’s largest shipping line, Maersk just reported they expect a 25% reduction in volume and possibly 140 sailings will be cancelled during the 2nd quarter. CMACGM another leading deep sea carrier just obtained a French Government loan of over $ 1.1 Billion .
Are there new hygiene practices in place for shipped goods? What about for shipping workers?
On cargo and packaging, I cannot say I have seen any changes. For ship crews, warehouse and port workers there has definitely been a very high level of hygiene and facial protection protocol. In our offices, we have maintained social distancing of 2 metres, staff must wear masks, we are not accepting guests into the building, and there is hand sanitizer everywhere. The safety of our staff and customers is paramount and Kestrel recently flew PPE for all of our teams and The Tropical teams into their islands for them and their families.
A lot of air freight travels on passenger planes. How has that impacted the industry and how has that been dealt with?
Absolutely impacted. Air cargo space is extremely tight. Previously, one could ship from China to many islands for about $5.00-$7.00 per kilo while today’s price is almost $20 per kilo!
There is virtually no airlift from the UK or Europe to the Caribbean. A number of airlines are using passenger aircraft to carry only cargo in the bellies and in the seats of the big jets.
From Miami there is one primary air carrier (Amerijet) maintaining wide coverage.
I think that within one to two months we may see more employment of more passenger aircraft carrying cargo, as American Airlines recently announced.
We recently chartered a 787 passenger jet to carry several million masks from China to the Dominican Republic. Kestrel’s global airfreight operations Hubs in Miami and London has been working flat out. Demand for our all air and air sea service has never been busier.
What is the outlook for the foreseeable future?
I have been closely monitoring the number of cases The count obviously is changing by the day.
What is remarkable is that most of the Lesser Antilles and Bahamas have not only bent the curve but a number of islands are now Covid-19 free.
So what is next?
I think there is a tremendous opportunity for the tourist-dependent markets to rebound, but no time soon.
The resounding theme will be that the Caribbean is safe. The challenge is the opening of passenger lift and keeping new cases from being imported. I remain deeply concerned that the rush to allow tourists into the islands will create another region-wide spike.
A number of hotel properties are re-opening but albeit as “soft openings” I do not have a good handle on how many resort projects will continue or be side-lined. If the 2008 Great Recession is any indicator; it could be several years before we see a renewed growth trend in extensive resort development.
Shipping and logistics will always play a huge role because someone has to make the delivery. I think the Caribbean ports need to be made more resilient to withstand other disasters we are used to including hurricanes and earthquakes.
Investment in infrastructure and handling equipment is needed throughout the Lesser Antilles. But ports are going to face fiscal challenges with less cargo and vessel income coming to sustain their revenue base.
For more, visit Kestrel Liner Agencies.
— CJ
