Genco Shipping & Trading CEO says the industry will spring back as demand will increase after the virus outbreak and slowdown in China
Singapore — The global shipping industry has run into rough waters in 2020 as the virus crisis that has engulfed China and roiled commodity markets added to headwinds from a seasonal slowdown and poor weather. One CEO who oversees a fleet of 55 vessels says there will be a comeback.
The health emergency has hurt prices of everything from iron ore to soya beans, and weighed on freight rates that were already under pressure. Genco’s dry-bulk vessels ferry iron ore, coal and grains, linking mines and farms with the markets that need the raw materials, including Asia’s top economy. The hit from the virus, which has slowed activity at some Chinese ports, has come on top of other challenges that have hurt rates, according to Wobensmith.
“It’s more just that because of the coronavirus, and the seasonality, and the weather, it’s been a perfect storm and it’s pushed rates very low on the larger ships.” The Baltic Exchange Dry Index, a gauge of vessel demand, sank 55% in January and hit the lowest since 2016 earlier this month as the virus spread through China, prompting the government to impose curbs on travel and industrial activity. Genco’s shares have taken a beating too, down 23% year-to-date.
China has sowed the expectation that it will ramp up spending in 2020 to offset the effect of the virus, though top miner BHP Group has cautioned that the next six weeks will be critical. China’s construction and manufacturing sectors need to return to regular operations in April to ensure that existing disruption can be made up for before the end of year, the world’s biggest miner said.
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