The outlook for the shipping industry is uncertain due to numerous factors, such as U.S. and China trade tensions, geopolitics, fuel economies, and environmental concerns. Of top concern, however, is the effect of the coronavirus (COVID-19) pandemic on shipping businesses around the world. As described in a PricewaterhouseCoopers report, COVID-19 "may adversely impact a shipping company's projected cash flows, such as a decrease in future charter rates, increase in off-hire days, increase in fuel prices, increase/decrease in operating expenses, increase in inflation, increase in a company's discount rate, etc." There continues to be high demand for shipping vessels in the U.S., and around the world, where there are COVID-19 hotspots.
Global maritime trade was expected to drop by 4.1 percent in 2020 due to the disruptions caused by the pandemic, according to a report by the United Nations Conference on Trade and Development. The accelerated distribution of the COVID-19 vaccine in 2021 will help the economy to recover. The UNCTAD projects that maritime trade will "return to a positive territory and expand by 4.8 percent in 2021," but it also cautions that the maritime transport industry should be prepared for change in a post-pandemic world. The pandemic brought into focus the issue of supply chain shortening, including nearshoring and reshoring, and the need for the shipping industry to invest in risk management and emergency response preparedness in transport and logistics. According to research group IBISWorld, the U.S. ocean and coastal transportation industry was projected to have a 44.7 percent decline in revenue in 2020, but renewed growth is expected from 2021 through 2026 due to the rebounding economic conditions in the U.S. and overseas. Renewed international trade activity will increase the demand for waterborne freight shipping post pandemic.
According to the U.S. Department of Labor (DOL), employment in water transportation occupations is expected to decline by 2 percent through 2028. There will continue to be opportunities for water transportation workers, however. Job openings will stem from the need to replace those who leave their positions for land-based jobs. Opportunities will also be good for marine oilers and sailors. New international regulations for higher standards of safety, training, and working conditions should lessen competition from ships that sail under foreign flags of convenience (FOCs). FOCs will have to pay higher insurance rates if they do not comply with the new standards. However, insurance rates for ships under industrialized countries' flags, including that of the United States, should become less expensive, increasing the amount of international cargo carried by U.S. ships.
The deep sea, coastal, and Great Lakes market is expected to decline in 2020, from $491.1 billion the previous year, to $463.7 billion, a drop of 5.6 percent in annual growth, according to a June 2020 market research report. The decline is attributed mainly to the economic slowdown caused by the COVID-19 outbreak and the measures that are being taken to contain it. The deep sea, coastal, and Great Lakes market is projected to recover down the road, growing at a compound annual rate of 5 percent from 2021 through 2023, to reach $526.7 billion.
Employment in shipping will be affected by newer ships designed to be operated by much smaller crews. Automated controls and computerized monitoring systems in navigation, engine control, watchkeeping, ship management, and cargo handling are some technologies that are reducing the need for large crews. Possible future developments include oceangoing cargo vessels that use jet propulsion, called fast ships. These new vessels would decrease ocean-crossing times and in turn, increase business and employment. Crew responsibilities, however, will change and they will need training to learn new skills.
The DOL reports that 83,400 people were employed in the water transportation industry in 2018. At certain points in the year this number may be twice as large, since many merchant marines and seamen work only part of the year. Among other careers in this industry are ship and water vessel captains, mates, and pilots; general and operations managers; laborers and materials movers; sailors and marine oilers; and ship engineers. The only job in water transportation that will have employment growth through 2028 is motorboat operators, adding 100 jobs in the coming years, an increase of 3 percent.
Another factor that may impact the shipping industry in coming years is piracy. According to the market research group Statista, as of May 2020, a year-over-year increase of 24 percent in the global number of pirate attacks and attempted pirate attacks had been recorded. The majority of these incidents occurred in the seas of the Gulf of Mexico and the Gulf of Guinea. The increase in piracy may be attributed to the COVID-19 pandemic, which has left many governments in weakened economic conditions and with insufficient resources to battle pirates. As the pandemic continues, an uptick in pirate activity is projected. There has also been increased piracy off the coasts of South America and West Africa, while Somali piracy has declined since 2017.
Accidents, illnesses, and other mishaps at sea on cruise ships have had some negative effects on that segment of the shipping industry. Events such as engine room fires to pirate attacks have left many potential travelers approaching cruise vacations with caution.
Cruise ship-related events that made headlines include the 2011 Carnival Lines cruise ship Splendor, and its 4,500 passengers, who were left stranded in the Pacific Ocean for several days with inadequate food supplies, inoperable toilets, and no refrigeration or lights. The ship was eventually towed to San Diego Bay where passengers disembarked and were taken by bus to their original departure point, Long Beach, California. In January 2012, the cruise ship Costa Concordia, with 4,000 passengers, hit a rock off the coast of the Tuscan island of Giglio and capsized, killing 32 and injuring at least 40 others. Cruise ships have also reported ongoing problems with outbreaks of illnesses aboard such as food poisoning from E. coli and salmonella, and highly contagious gastrointestinal diseases such as the norovirus. There were several outbreaks of the norovirus aboard both foreign and domestic cruise ships between 2015 and 2016 where up to 30% of the passengers were infected. In response the CDC made sure that the cruise lines increased disinfection procedures and collected many samples from passengers on these cruise lines. Public health and sanitation managers were sent to oversee the process.
Since early 2020, the coronavirus has been added to the list of illnesses aboard cruise ships around the world. Starting in March 2020, the Centers for Disease Control issued a No Sail Order for cruise ships in waters subject to U.S. jurisdiction, in response to the high risk of spreading coronavirus aboard ships and in ports of call. This No Sail Order was extended through July 2020, and further extensions to the order are probable. In June 2020, Cruise Lines International Association announced that all cruise lines had voluntarily agreed to suspend all operations out of U.S. ports through mid-September 2020. The cruise industry will rebound once the pandemic ends and the economy recovers, however, industry experts foresee a poor outlook for the immediate future.