“The mood-music surrounding the container market has deteriorated further in the last three months,” claims Drewry Shipping Consultants, which has actually devalued its overview for globe container port throughput for the present year et cetera of the five-year perspective in its just recently released Container Market Annual Review and Forecast 2019/20.
Drewry currently anticipates international port throughput to increase by 2.6% in 2019, below the previous 3.0% assumption.
“The weight of risks pressing down on the container market seems to be getting heavier by the day,” stated Simon Heaney, elderly supervisor, container research study at Drewry and also editor of theContainer Forecaster “The scenario has actually been intensified by a support of brand-new issues that mask the marketplace in additional layers of problem and also unpredictability over those that formerly existed.
“There is a danger that this stream of negative news creates a self-fulfilling prophecy that might run contrary to the facts on the ground. First-half port statistics were reasonably strong and consumer demand had been fairly resilient, all things considered, but some key indicators have more recently taken a sharp decline and we feel it is right to adopt a slightly more cautious attitude.”
INFLUENCE OF IMO 2020
One of the significant dangers recognized in the record is the influence of IMO 2020 on containership supply. There is still no clear assistance on simply just how much added price it will certainly come down on the market and also the current drone assaults on Saudi oil centers muddied the waters when it triggered oil costs to surge.
Drewry’s present quote is that drivers will certainly next year be confronted with an extra $11 billion gas expense connected to the switchover to low-sulfur gas oil and also the level of payment that service providers obtain will certainly determine the degree of supply disturbance following year.
“Our working assumption is that carriers will have more success in recovering that cost than previously, to the point that there will be no major disruption to supply,” statedHeaney “However, if they fall short by a significant margin we think that lines would quickly dust off the decade-old playbook that was used to see them through the global financial crash. There will be much less focus by carriers on service quality and more on cost cutting. In that scenario, carriers will try to protect cash flows by restricting capacity as best they can, through a combination of measures, including further slow-steaming, more blank sailings, and off-hiring of chartered vessels.”
Failure to recuperate even more of the bigger gas expense is additionally most likely to press even more carriers/owners to either have actually even more ships fitted with exhaust scrubbers to be able to proceed working on the less expensive high-sulfur oil, and/or to ramp-up demolitions.
“If events follow this path the supply-demand balance will look very different from our current forecast. The worst case scenario, when most shipping lines cannot operate close to breakeven and some potentially face bankruptcy, would actually be a far quicker route to rebalancing the market than the current plodding track. It would take a very brave carrier to want such a turn of events, but for those that could be sure of coming through the other side, after some initial pain the rewards would be far greater,” statedHeaney “Most shippers accept that they will have to pay more but they rightly expect any increase to be justified with a credible and trusted mechanism – in other words the ball is very much in the carriers’ court.” stated Heaney.
