The Coronavirus or COVID-19 (“Coronavirus”) from Wuhan, People’s Republic of China (“China“) has engulfed as many as 213 countries across the globe with a medical emergency and has claimed more than 258,160 lives till now with 3,689,887 affected cases.[i] This strain of virus has proven graver than the other types of Coronaviruses and it has never been identified in humans before.[ii] Coronavirus belongs to the zoonotic group of viruses which can affect human being with a range of health ailments ranging from the common cold to serious problems such as Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV).[iii] The World Health Organization and other countries including the US have declared it as “Global Public Health Emergency” and therefore it has been declared as public health emergency of international concern (PHEIC). In order to restrict the transmission of the virus, China has taken various restrictive measures which have caused serious human rights violations including but not limited to arbitrary censorships, lockdowns, quarantines, police suppression, and mass detentions.[iv]
The declaration of Coronavirus as a global emergency according to Reuters[v], impelled the China Council for the Promotion of International Trade to provide ‘force majeure’ certificates to corporations with the consequences of the impact of coronavirus on their day to day business with overseas partners. The main cause being the impossibility of fulfilment of contracts due to restrictions in transport or storage of goods related to an international transaction. The implications felt due to the virus are manifold. The maritime sector being of considerable importance to all countries in the region has felt the effects significantly. In order to elucidate this further, one can observe the reverberations and fears are felt through Asia and especially the ASEAN countries. Indonesian fishing industry has taken a major hit as the state has taken measures to shut down shopping malls, fish exports and transactions at the fishing ports following the rise of confirmed cases up to 12, 438.[vi] The Indonesian Ministry of Maritime Affairs and Fisheries placed restrictions on the importing of fisheries and related products from China to restrict the transmission of the virus.[vii] The circular[viii] issued by the Maritime and Port Authority of Singapore (MPA) permitted temperature screening at all sea checkpoints, including ferry and cruise terminals, PSA terminals and Jurong Port, for inbound travellers. It had also placed regulations to take additional precautionary measures such as prohibiting shore leave for personnel in China ports, mandatory temperature checks, keeping a log of crew movements and restricting staff travel to China among others. The significance of Singapore, Southern China, and Taiwan to worldwide supply chain and international finance is extraordinary. To the point that if these areas are before long compelled to totally cut off aerial joins with one another it will be to think about a sensible equal in North America or Western Europe. Yet, one may envision what the US would resemble if the progression of individuals, administrations and cargo between New York, Washington and Chicago were to bring to a sudden stop by, state, a pandemic exuding from the core of the People's Republic of China.
China is the world’s largest oil importer, with more than 10 Mb/d of crude oil being imported. Therefore any impact on the demand created by the Chinese is considered to be significant both in terms of volume and import according to the statement of Poten & Partners.[ix] The Oil industry faces serious concerns regarding the implications of Coronavirus as the rates have weakened recently due to both direct and indirect impacts due to market psychology. Supply chains have begun feeling the heat. The Motor industry has been equally affected. Hyundai Motor Co. said[x] it will begin suspending production at all seven of its plants in South Korea because of a lack of parts made by suppliers in China. Motor Corporations such as Tesla Inc. and Kia Motor faced the brunt of the consequences. The former predicted delay in delivery due to closure of its Shanghai factory whereas the latter had reduced the car production in three of its South Korean plants.
The Cost of the Outbreak has been also impacting Maritime Transport, resulting in lower demands and difficulties of delivery. According to Maersk, one of the most popular company in the Maritime transport business, the freight rates are expected to decrease due to loss of demand for containerized goods. The virus is also stopping work at China’s shipyards, where dozens of ocean-going vessels are undergoing repairs or are scheduled to be retrofitted with sulphur-trapping exhausts in line with a mandatory global maritime directive to drastically cut ship sulphur emissions.[xi] Goldman Sachs used the 2003 SARS outbreak as a reference case to model the potential impact of the coronavirus outbreak on the oil and jet fuel markets.[xii] They estimated a 260 Kb/d decline in oil demand, primarily driven by a 170 Kb/d drop-in jet fuel demand, although gasoline demand would be impacted as well. Oil prices are expected to fall by USD 3.00/barrel.
The Shipping Companies are reducing the transport by seaborne vessels which is affecting the supply chains at all levels. Due to the mass percentage of international trade by the sea, Intra-Asian and global supply chain has been faced impediments. Not only the ships are not able to enter the Chinese ports, but the ships are considered to be “floating quarantined” as they are held in docks, their workers held up for inspection, the cancellation of shore leaves, extra port inspections et al. The countries of Southeast Asia have a broad exchange of goods through the sea and international trade is intertwined connections to and with China. The regional ramifications of the disease have had a significant effect on the travelers, Chinese voyagers, especially during Lunar New Year. It was consequently nothing unexpected that the area was one of the primary regions of China and Hong Kong to confront coronavirus cases. In any case, various Southeast Asian governments have reacted ineffectively to the spreading pandemic. Thailand, specifically, has blundered the reaction, yet it is not really one of a kind. These disappointments, thusly, have raised the danger of bigger episodes in their nations.
***The views expressed herein do not necessarily represent the opinions of JTMS or Yonsei Institute for North Korean Studies.
Author Profile: Ankit Malhotra is a student of Law at the Jindal Global Law School at O.P Jindal Global University. Bodhisattwa Majumder is a penultimate year student at Maharashtra Law University Mumbai and an Associate Editor of the Indian Journal of Law and Public Policy. The authors share an inclination towards the Law of the seas and will be happy to have any discussion related to the paper via mail at bodhisattwa@mnlumumbai.in or 19jgls-ankit.m@jgu.edu.in.
[i] “Coronavirus Maps and Cases: Track the Global Spread”, CNN Health, Available at https://edition.cnn.com/interactive/2020/health/coronavirus-maps-and-cases/, Last Updated: May 6, 2020 at 10.45 am ET.
[ii] “Coronavirus disease (COVID-19) Pandemic”, World Health Organization, Available at https://www.who.int/emergencies/diseases/novel-coronavirus-2019, Accessed on 06th May, 2020.
[iii] “Factsheet for health professionals on Coronaviruses”, European Centre for Diseases Prevention and Control, https://www.ecdc.europa.eu/en/factsheet-health-professionals-coronaviruses , Accessed on 05th May, 2020.
[iv] “Explainer: Seven ways the coronavirus affects human rights” Amnesty International, https://www.amnesty.org/en/latest/news/2020/02/explainer-seven-ways-the-coronavirus-affects-human-rights/ , Accessed on 06th May, 2020.
[v] “Ports take precautions against Coronavirus”, Port Strategy, Available at https://www.portstrategy.com/news101/world/asia/ports-take-precautions-against-coronavirus, Accessed on 06th May, 2020.
[vi] Falahi Mubarok, “Sinking feeling for Indonesian fishers as COVID-19 hits seafood sales”, Mongabay, Available at https://news.mongabay.com/2020/04/sinking-feeling-for-indonesian-fishers-as-covid-19-hits-seafood-sales/, Accessed on 06th May, 2020.
[vii] Toan Dao, “Coronavirus concern has Indonesia restricting imports of live fish from China”, Available at https://www.seafoodsource.com/news/supply-trade/coronavirus-concern-has-indonesia-restricting-imports-of-live-fish-from-china , Accessed on 1st May, 2020.
[viii] Port Marine Circulars, https://www.mpa.gov.sg/assets/circulars/Port%20Marine%20Circulars.pdf, Accessed on 06th May, 2020.
[ix] Marcus Hand, “Headwinds seen for tanker market from impact of coronavirus on oil demand”, Sea Trade Maritime News, https://www.seatrade-maritime.com/tankers/headwinds-seen-tanker-market-impact-coronavirus-oil-demand, Accessed on 06th May, 2020.
[x] “Supply Chain by the Numbers”, Supply Chain Digest, http://www.scdigest.com/assets/newsviews/29-02-06_Suppy_Chain_Numbers.php?cid=16327, Accessed on 05th May, 2020.
[xi] “Coronavirus Hits Shipping as China Port Traffic Slides”, The Wall Street Journal, https://www.wsj.com/articles/coronavirus-hits-shipping-as-china-port-traffic-slides-11580928711, Accessed on 05th May, 2020.
[xii] “Coronavirus outbreak impact on Shipping”, Nepia, https://www.nepia.com/industry-news/coronavirus-outbreak-impact-on-shipping/ , Accessed on 06th May, 2020.