A containing concern

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There is much concern floating around the world of container shipping in 2019 and it’s not all to do with the forthcoming IMO global sulphur cap. Well not for everyone, as industry experts still believe that increased crude oil prices will also hit the shipping industry and those most at risk which will be container ships. They could see their profits fall but not solely down to the sulphur issues.

Among the other significant factors could be the downturn in the Chinese economy – both now and in the short-term future – and the fuel price increase combined with still dispiritingly low freight rates. The slowing global trade is down to more than just the Chinese economy and by adding in potential rising fuel prices and over-capacity in containers, it’s not hard to see why some economists believe there will not be a much hoped for rise in this sector of the maritime industry.

The world continues to change in terms of supply and demand and the container sector is particularly sensitive to such whims. Even the ‘big beasts’ of the industry such as CMA CGM and Maersk are moving in new directions. It is still hard to make money in shipping and yet with around 90% of the world’s trade floating across the oceans it remains the only current viable method of transportation on a global scale.

Shipping was once the sector where small companies could exist on a fleet of one or two ships: moving between markets was a lucrative business in the past but now, with billions staked on gigantic carriers and low freight rates, it seems almost impossible to make money in container shipping. As the carriers try to pass on the new anticipated fuel cost rises to their customers, the whole shipping world looks on wondering what next. But some experts believe there will be some light at the end of the tunnel.

There are hopes that demand for container shipping will increase in the short-term, albeit in single digit figures but it won’t mean the end of those monster carriers: any new shipping tonnage could see container ships reaching more than 20,000 boxes per vessel. The real problems come when the carriers meet the reality of reduced supply chains and a reluctance of some shippers to maintain current delivery schedules. This will be an important year for the shipping world but there’s more to come in 2020 for those who hold their nerve.