The uncertainty ranges from the extra cost associated with
IMO 2020 and how much carriers will recover from shippers, to the possibility
of a trade recession and unknown future engagement by shipowners in large
vessel building programmes.
“The degree of uncertainty is probably the highest it has
been in a decade,” said Simon Heaney, senior manager, container research at
Drewry and editor of the Container Forecaster.
Every region is expected to see container port handling
growth in each and every year of the five-year forecast horizon of the
Container Forecaster, albeit at a slightly slower pace than Drewry was
previously anticipating. Moreover, supply growth is expected to be below that
of demand through 2023, which will assist the industry’s ongoing effort to
rebalance an over-supplied market.
Drewry expects that the industry will be close to
equilibrium by 2023 with its Global Supply-Demand index reaching a reading of
“Our analysis makes it very clear that it is essential that
carriers increase their fuel recovery ratio, or else there will be serious
consequences,” said Heaney.
“What gives us confidence of a better tomorrow is that
despite weaker supply-demand fundamentals, carriers last year managed to secure
marginally higher rates, proving themselves capable of exerting a greater
degree of pricing discipline. We expect IMO 2020 to raise the industry’s fuel
bill by around 50% in 2020, which will certainly sharpen minds and serve to
keep carriers on track.”
Drewry expects strong resistance from BCOs to new BAF
formula, but carriers could be more successful than in the past due to the
wider market acceptance of burden sharing and the fact that lines started
discussing mechanisms early with shippers, giving them time to iron out any
“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,” said