The focus on ocean shipping vis-a-vis COVID-19 has been on what the outbreak means to the economy and what the economy means to vessel demand and freight rates.
But there’s a different way to look at it: by focusing instead on what ocean shipping has to say about the COVID-19-era economy.
The global financial crisis in 2008-2009 differs in many ways from the current crisis. Even so, what befell shipowners in the decade after the Great Recession offers telling parallels to what U.S. businesses will likely face in the years ahead.
Income streams plunge
Shipowners rode a China-fueled super-cycle in the half-decade before the financial crisis. Record-high spot rates and time-charter rates supported historically steep vessel valuations. Bank debt was abundant, at times covering 90% of asset values. Lenders were relatively indiscriminate in whom they lent to.
When the global financial crisis struck, spot rates plummeted. Owners with long-term