Analyst tells Intermodal Europe conference that despite the challenges on the horizon, container shipping slow steaming to a general recovery.
“Plodding along” were the words used by Simon Heaney, a senior analyst at London-based Drewry Maritime Research, used to describe the pace of what he expects will be a general recovery in the liner shipping industry.
Addressing delegates at Intermodal Europe 2019, he said that a recovery in freight rates was expected on the back of rising cargo volumes, following the shocks of the past 18 months, and the ordering of ships being at more conservative levels. In particular, fewer newbuild contracts are likely to be signed for ultra-large container vessels.
The analyst also expects the IMO 2020 sulphur cap regulation to drive up rates. “BAFs will be higher next year and we see average freight rates overall rising by 6.5%,” said Heaney. “We believe lines will recover approximately 75% of their increased fuel costs, but if they don’t then there will be a greater focus on protecting cash flows, less investment in IT systems and even more slow speed steaming.”
Clearly, though, the research company adheres to a better future. “The industry [liner] is plodding along and heading towards a state of equilibrium,” he said. “However, I do not see this being achieved over the next five years.”