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Home » Economic uncertainty roils maritime container shipping, report says
Forward Thinking

Economic uncertainty roils maritime container shipping, report says

July 5, 2019
Supply Chain Quarterly Staff
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The maritime container shipping market faces disruption in 2019 due to mounting economic uncertainty triggered by tariffs on international trade, according to a report from the shipping consultancy Drewry.

Citing those conditions, Drewry on Wednesday downgraded its forecast for global port throughput growth in 2019 to 3.0 percent, from its previous prediction of 3.9 percent.

"We remain confident that world trade will rebound in 2020, but much will depend on developments outside of carriers' control," Simon Heaney, senior manager, container research at Drewry, said in a release. "Further spreading of protectionist policies could stunt growth, particularly if the U.S. aims its tariff target at other trading partners."

The sector faces "concerns of a slowing global economy" due to three immediate causes, the June edition of London-based Drewry's quarterly "Container Forecaster" says. Headwinds hindering the container market include: the ongoing U.S.-China trade war, escalating geo-political tension in many regions of the world, and an industry grappling with challenging new emission regulations.

Those regulations will be set by industry group the International Maritime Organization (IMO), which plans to institute in 2020 a strict cap on sulphur content in marine fuels, a change which is already pushing fleets to buy new fuels, install emissions scrubbers in ships, or apply "slow steaming" rules.

Those three recent factors exacerbate another level of shipping industry concerns, considering fundamental changes to global consumption habits caused by long-term effects like the regionalization of manufacturing supply chains and the growing momentum behind low carbon, environment-first buying patterns, Drewry said.

"Carriers can be forgiven for not having all of the answers in such times. One suspects that even Nostradamus would throw his hands up in despair; such is the volatility of the leading characters," said Heaney, who is also editor of the Container Forecaster. "There will undoubtedly be some errors along the way and the risk of temporary supply issues has undoubtedly been raised, either from too many cancelled sailings or misplaced capacity transfers between trades."

The report did contain one point of optimism, noting that there could be some upside for trade if more manufacturing production is relocated outside of China. "The Asian export powerhouse has progressively reduced its requirement for foreign inputs, choking off demand for intermediate goods, so any shift to less self-reliant economies should give trade a bit of a kick-start," Heaney said.

Market disruption, a slowing global economy, geo-political tensions, regulatory change. Our industry-leading analysis can help your business chart a safe passage through the uncertainty. Read the press release at https://t.co/9JwnnuLfXe #containershipping #forecasts pic.twitter.com/sLBzl3isYv

— Drewry (@DrewryShipping) July 3, 2019
Global Strategy
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