In recent months, the shipping industry has taken a real hit due to the migrant crisis in Europe. Vital shipments of goods and medical supplies are being delayed or even destroyed as border delays and disputes continue to rise. In this article, Shipping lawyer Simon Murfitt takes a look at what the space can expect from the rest of 2016.
1. Statistics from the end of last year show the escalating impact the migrant crisis is having on the shipping industry. Delays and stoppages in Calais cost UK shippers, alone, over a million dollars. With that in mind, what do you think the European shipping market will look like in 2016?
While every element of the underlying contributory factors are moving, in the event that one of the primary root causes, the Syrian crisis, continues, there will be further losses. That being said, such losses should be lessened given the passage of time and the ability of all parties to react and mitigate them through certain changes in their operations, policies and procedures.
2. Unprecedented disruption has led to border closures or transportation stoppages and slowdowns at ten different European Union borders in three weeks in September. Could shipping companies employ any strategies to avoid these routes and the worst-affected areas?
By developing two key elements of the operations, specifically (i) operation supply chain flexibility and (ii) better current situation reports and advice, ship companies will at least have a greater chance of being (a) aware of the situations before they actually physically encounter them and (b) have a greater number of operational options available to them in response to such situations.
3. How difficult is it to change route based on (more or less unpredictable) events such as the above?
Every situation is different and, ignoring the unavoidable physical realities of shipping such as weather, if a shipping company is at first better prepared along the lines described in my response to 2 above, planning and implementing such changes will undoubtedly be much easier.
4. What else can shipping companies do to quickly adapt to the current circumstances and avoid further losses?
Plan ahead and involve trusted key strategic and operational advisors and partners in such planning. Regular and systematic risk analysis along with commercial review and re-negotiation of key contracts to ensure they can adapt to the recommendation of that risk analysis are both essential.
5. If this is set to continue, do you think the crisis has the potential to re-shape the layout of European and global trade, in terms of routes, regulations and international trade agreements?
Inevitably during this process of operational review and change some greater efficiencies and creative work-out solutions will emerge. Some of these will undoubtedly continue post-crisis. In the same way, depending on the shape and composition of a post-crisis Middle East and Europe adaption, certain traditional operation routes will not be changed, while others will no longer be available.
6. Seeing that it is first and foremost a humanitarian crisis, do shipping companies share some of the responsibility to help with the unfolding migration crisis?
Shipping companies have a long history of humanitarian assistance. In the current circumstances, their unique combination of route and condition knowledge along with logistical expertise is invaluable.
7. How could shipping companies help in providing support to people fleeing conflict?
They could help by sharing operational knowledge both of up-to-date route and related infrastructure conditions, and also by ensuring that any knowledge obtained with regard to illegal and dangerous operations along their routes are reported promptly and accurately to the relevant authorities.
8. Will attitudes of shippers change and is there a chance that big shipping organisations might become proactive in alleviating this problem?
As a lobby group certain sectors, containerised shipping in particular, have very valid and powerful voices. This is only increasing as this industry is consolidating both operationally and physically. That voice as a lobbying tool will undoubtedly get louder and European national governments will have to take more notice.
9. Do losses like the ones experienced in 2015 on a European level have the potential to extend and impact global trade?
Yes, if they continue unchecked. However the global trade economy is incredibly diverse and creative and hence new trade routes, mechanisms and players will emerge if the economic conditions continue to call for such change.
10. What would be your predictions for the future regarding the impact the migration crisis will leave on the European cargo shipping trade?
My predictions for the future would include both short-term and continuing increased security and operational costs as well as operational and policy developments. Some of these will undoubtedly continue post-crisis, meaning that the European and international cargo shipping trade will never be quite the same again.
Comments first published by Global Ship Technology Magazine
This article is for general information purposes only and does not constitute legal or professional advice. It should not be used as a substitute for legal advice relating to your particular circumstances. Please note that the law may have changed since the date of this article.