Recap webinar Short Sea Shipping

The impact of COVID-19 on Short Sea Shipping was the topic of the second RMSC webinar on May 13. We asked three experts to share their perspectives on the impact of the corona crisis on Shipbroking, Surveying and Legal Advice. Our board member Raymond Ko moderated the interactive session.

S&P Brokering

Having a positive attitude comes natural for shipbrokers, and this is certainly the case with Rod Schlick, owner of Friday & Co Shipbrokers. He stated that the impact of the corona crisis will be immense, but the short sea shipping market might recover sooner than anticipated.

Finance remains a big hurdle, but with the increased focus on sustainability in the short sea sector, funding might be only available for newbuild and replacement projects, and this will then increase modern, efficient designs. Older, less efficient ships will be forced out by stricter focus on emission footprints and the portfolio restrictions by banks.

If the Far East short sea market is an example for the European market, the outlook is slightly positive, as in the Far East ships are being sold again.

The legal elements

The COVID-19 outbreak is a real crisis, not based on ‘only’ a lack of trust between parties. As a result companies are currently (more than before) trying to find solutions together, renegotiate and solve problems.

Marcel Verhagen of DOCK stated that there are still large amounts of cargo being moved, but the drop in fixtures is stating now. What will this mean in the near future and how far can the re-negotiation reach?

Forge Majeure, often mentioned, but with the world getting ‘used’ to the new normal, it cannot be enforced easily anymore.

Parties are still trying to sort things out between each other. Marcel lectured the audience a bit on the legal clauses in a contract. Most contracts state “subject to English Law and arbitration”, but in English Law, Force Majeure is not defined, so this has to be defined in every contract, otherwise you cannot rely on it. One of the most used BIMCO standard contracts, GenCon94, does not have Force Majeure specified, so this has to be inserted. Marcel stated that this might be an opportunity for Dutch shipowners to put Dutch law and arbitration in contracts

Surveying

The COVID-19 outbreak made it more difficult for surveying companies to travel the world when insurers or shipowners ask for their expertise. Jan van Esch of Artium Experts sees an increase of remote surveys, and thinks this development is here to stay, but for limited sorts of surveys.

After damages or accidents, a proper investigation, onsite with an expert, will provide a detailed impression, and this is important for insurance companies. This might be opposed by the owners, who are best served with a swift restart of the vessel.
Marine Surveyors can also perform negotiations with the yard on site, while it will be different during an online meeting afterwards.

Again, in this case as well, trust is of importance – will classification societies or insurers allow remote surveys or do they always want an independent opinion? In addition, there might be operational difficulties – as in the hull or a hold there might not be proper connections. Data security is also an item to think about.

Jan, and the audience agreed, that surveys for valuation or condition surveys are the first to go remote and this will probably remain after COVID-19. But for expert opinions onsite surveying will stay necessary.

Possible Positive Impacts?

To end with a positive note in this difficult time, Raymond Ko asked the presenters on possible positive developments after the crisis?

Marcel didn’t have to think twice and expresses that in legal practice, it is now easier to hand in documents online to court and have remote hearings.

Rod: “Corona is a terrible disease, but might be a blessing for work processes”. Digital closings when selling a ship, can be part of the future, as the acceptance of documents online is growing. One of the main problems remain difficulties with crew changes

Jan expressed the fact that maritime is still peoples business, and that won’t chance overnight. The acceptance of technology however, has grown overnight and this combination will enhance the competitiveness of the maritime industry.

RMCS thanks the audience and the speakers and look forward to the next webinar.