We have had one of the most dramatic March month in our lifetime. The Brexit discussions, critical US – China trade talks, Venezuela in total chaos, a nuclear standoff between India and Pakistan and Kim Jong-un readying more nuclear weapons ... these are a some of the few matters keeping at least some of us up at night!
Uncertainty is bad news
Uncertainty will reduce growth for the global economy and by extension for most shipping sectors. I do not see a recession, just a protracted period of slower growth.
The world is more worried about growing protectionism around the world than the slowing Chinese economy. We are genuinely concerned about the weakening Chinese economy – and you should be too. Fact: there are 65m empty apartments across China. 65,000,000 unsold properties! You wonder how banks can survive such a catastrophe. In a way you could argue the US actually now holds the whip hand in the ongoing trade talks. Also, the US economy is getting overheated with the lowest unemployment in 100 years .
The problem for the world economy and by extension shipping is that there is no country that can replicate what China did since the dawn of the millennium in terms of growth. Hopes that India might replicate such a stunning economic transformation are misplaced.
Europe and Brexit
Back in Europe, meanwhile, once Brussels has finally resolved its Brexit discussions, EU-US trade talks are fast approaching and these two have been at each other’s throats in recent months. And Europe might now have to pay for the bad way they have treated US imports for many years.
Boxship sizes have plateaued
All of which leads me to agree with comments made by Søren Skou, the CEO of AP Moller-Maersk, earlier this month, suggesting that boxship sizes have plateaued finally.
We have surely reached a limit on boxship sizes as there is now very limited benefit of adding another 1,000 teu in size while growth for liners going forward will increasingly come from local and regional trades rather than the main east-west trades. And then there’s the threat posed by 3D printing, but maybe that’s a whole other column for another time.
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| With a DWT (deadweight tonnage) of 191,317 metric tons, the OOCL Hong Kong has a cargo capacity of 21,413 TEU, making it the world's largest container ship. |
Like the liner trades, the current woes facing the global economy would suggest dry bulk’s travails could be extended for quite some time. Indeed, the only areas set to profit from all that is going on are in energy transport.
What’s bad for the world is good for the tanker market: Changing oil patterns are going to work out just great for tankers with growing ton-miles!
Bright future for Clean energy shipping
We can expect a very bright future for those involved in clean energy shipping such as LNG and hydrogen – a bright spot to end!
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