Sulphur restriction container industry’s strongest headwind

Uncertainty amongst the container shipping fraternity is likely higher than it has been in a decade, according to maritime analyst, Simon Heaney. Heaney said there were several headwinds facing the industry, with the looming International Maritime Organisation sulphur restriction of 2020 (Imo 2020) at the forefront of this. “Of particular concern are the extra costs associated with the maximum 0.5% sulphur emission rate expected from vessels by January 1 next year and how much of these costs the carriers will recover from shippers,” said the senior manager of container research at maritime consultancy, Drewry. Heaney, however, cautioned against “overstating” these concerns, commenting that ocean freight industry thought leaders often

tended to “talk down the market” when in fact the container industry was moving in a positive direction, albeit slowly. “The industry is resilient and has shown that it can adapt quickly at times of stress, and we expect it to come out the other side in a stronger position,” he said, although he did indicate in a recent Container Insight report that IMO 2020 would raise the container industry’s fuel bill by around 50% next year. “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. He said what drove Drewry’s positive outlook was 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. To survive, container

carriers need to address their customers’ growing needs for predictability and visibility of carrier performance, added Philip Damas, head of logistics practice at Drewry. He said the third annual shipper satisfaction survey showed decreasing customer satisfaction with carriers’ performance. The survey revealed

that the 249 shippers and forwarders who took part in the survey rated the service of container shipping lines with a score of 3.1 on average, which is 0.1 lower than last year. The scale is rated from one or ‘very dissatisfied’, to five for ‘very satisfied’. Customer satisfaction was reported least favourable for clarity of

prices and surcharges, transit times, and  reliability of booking/cargo accurately shipped as per instructions. “It is very clear that clarity of prices and surcharges has become a key topic for shippers and forwarders – particularly medium-sized ones,” said Damas. It is very clear that clarity of prices and surcharges has become a key topic for shippers and forwarders.