Norwegian chemical tanker boss Niels Stolt-Nielsen has argued that an extended global lockdown will kill more people than the coronavirus pandemic.
The chief executive of Stolt-Nielsen told a conference call with analysts that societies should open up when safe to do so, to protect the economy.
"Moving chemicals around the world, which is the feedstock for manufacturing, of course, is going to impact us," he said.
"But to what extent? You also have to remember that we are also carrying a lot of stuff which is essential. Fertilisers, detergents, all the chemicals which are useful for detergents."
He said he would not speculate how the situation will develop, and added that it all depends on how long lockdowns last.
"I hope it’s not going to last forever," he said.
The executive added that the economic meltdown or collapse resulting from an extended lockdown "will have a bigger mortality than the virus."
"So we have to open up," he added.
Healthcare capacity is key
"And hopefully, once all the countries have enough hospital beds and enough ventilators that they will start gradually to open up again."
The company mantra during the crisis is "hoping for the best, but preparing for the worst".
"You can say that what we’re seeing in terminals, we’re seeing a high inquiry for storage. And of course, that is products that are not being consumed," Stolt-Nielsen said.
"So I wonder if the chemical manufacturers, like the oil producers, they are continuing to produce because it’s very expensive to close down the production entities."
He argued t it is more economical to keep processing plants running, even at lower volumes, if the lockdown is going to be for three or four months.
"That means that they will still produce, they will still have to find storage for it," he said.
"When the storage on the loading side and on the discharge side is full, and when all the inventory is full, maybe then they will start looking for floating storage."
He said the company is seeing that optimistic trend in the terminals and tank container business.
"Maybe we can also see it on the shipping side," Niels Stolt-Nielsen said.
The company has said it is tearing up deals for some scrubber retrofits to save money in the coronavirus pandemic.
The move is part of a plan by the company to combat a potential demand drop of 40%.
Unaccustomed loss
The company logged its first loss in 64 consecutive quarters last week, ending its first quarter to 29 February $20.2m in the red.
The boss said: "I regret to show you the loss."
Niels Stolt-Nielsen pointed to three factors for its tankers.
"It was an early transition to low-sulphur fuel, which was around $4m that we weren't able to pass on," he said.
"Then we had low utilisation there because of the ballast legs. And the ballast legs were due to the drydocking related to scrubbers and the ballast water treatment systems."
He added that the explosion on the 43,000-dwt tanker Stolt Groenland (built 2009) last year also led the company to re-position ships. That caused scheduling issues across the Stolt-Nielsen fleet.
