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Coronavirus Wreaks Growing Damage on Italian Shipping, Supply Chains

The coronavirus pandemic is taking a growing toll on Italy’s maritime sector as traffic at the country’s ports slows and lockdown efforts undercut trade connections with the rest of the world.

In a letter last week to Italy’s minister of infrastructure and transport, the country’s shipowners asked for direct state funding over three years. They also requested an 18-month moratorium on all financial obligations and a year-long exemption on social security payments for vessels under the Italian flag.

Italy is at the center of the Covid-19 outbreak in Europe and the second-hardest hit country after China. As of Tuesday, there were 63,927 confirmed cases and 6,077 deaths attributed to the virus in Italy, according to the World Health Organization.

Italy has exempted its ports from lockdowns to keep supply lines for essential medical goods and food intact. Some 70% of the country’s total trade is moved on ships, according to the Center for Economic Studies and Research, an independent data research group in Italy.

Italian shipping had just started to emerge from years of painful restructuring, a recovery industry officials say now may be halted.

“Nowadays it is virtually impossible to travel, so it is virtually impossible to have proper meetings,” Mario Mattioli, chairman of Confitarma, one of Italy’s main trade bodies for shipowners, said in the letter to the government.

He said debt deals with creditors are up in the air and shipowners may default and be declared bankrupt.

“You find yourself in a situation where there is [an] impossibility to discuss the situation, and, at the same time, the lender decides to go ahead with the sale of the credit to a fund,” Mr. Mattioli said in the letter seen by the Journal.

Italian companies own or operate more than 1,000 vessels, handling products such as precision machinery, metal products, high-end clothing and footwear, motor vehicles, motorcycles and scooters. Inbound ships mostly bring chemicals, pharmaceuticals and food.

An executive with the Assarmatori, another shipowners’ association, said Italy-flagged vessels are increasingly being turned away at ports around the world.

“Some countries like Saudi Arabia, Angola and Algeria will not let our ships dock or keep them waiting outside ports for a long time,” the executive said. “One of our ships was quarantined for 14 days in New York. It’s a big problem because we are high up on a blacklist of virus-infected countries and there are long delays to deliver cargo.”

Port officials across Italy say activity at the country’s container terminals has slowed down, with some operating at 75% capacity as many workers are staying home.

“The increase of the number of people in quarantine leaves companies short-staffed,” said Lars Jensen, chief executive of Copenhagen-based Sea-Intelligence Maritime Consulting. “Hence, even if the container is delivered to port, there is no guarantee it will be picked up, emptied and redelivered in a timely fashion.”

While Italy is still allowing truck drivers to haul freight, Mr. Jensen said workers in other parts of supply chains can’t return to work and their jobs can’t be done remotely, including inspections, packing and unloading cargo containers, documentation and financing.

“The net effect in Europe over the coming weeks will be a slowdown in the turnaround speed of containers,” he said. “This, in turn, will mean that we may see container shortages in Asia.”

In a separate letter to European governments earlier this month, associations representing cargo owners, rail freight, container terminals, road transport and ports, said Italian cargo is vital to the rest of Europe.

“The coronavirus phenomenon is critical in Italy, but is expanding throughout Europe,” the letter said. “The Italian economy is closely linked to the markets of Central and Northern Europe. If the flows of goods do not work, there is a risk of the collapse of the entire economy.”

Gianni Abramo, a truck driver who moves products for fashion houses including Prada and Gucci in northern Italy where the coronavirus has hit the country hardest, said he has been stuck at home for the past 10 days with his wife after she was exposed to the virus at a school meeting.

“I can’t get tested so I can eventually return to work,” Mr. Abramo said. “My company told me they are looking for another driver. I’m ruined.”
Source: Wall Street Journal

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