• Tuesday, May 22, 2018

Fasten your seatbelts: Key drivers in 2017

By BCShippingNews 26 January 2017
Robert Lewis-Manning, President of the Chamber of Shipping, weighs on shipping industry prospects for 2017...

If you are one for excitement, uncertainty and change, then 2017 should be a banner year for you. Having survived (mostly) two tumultuous commercial years, 2017 could include the ingredients for a recipe of very, repeat very, modest commercial recovery.

Before one becomes excessively excited about the potential for a break-even income statement, marinte commerce in Canada will need to deal with the uncertainty created largely from pending policy choices both at home and abroad; decisions which may or may not align with the needs of ports and ship owners. Perhaps more than ever before, the marine industry will seize the attention of the public and this unprecedented visibility should be leveraged, but could inevitably be a risk to addressing many of the constraints to its growth within the larger supply chain.

Photo above: A done deal? The Kinder Morgan pipeline expansion project will likely still be a key issue for the upcoming B.C. election. Photo by Dave Roels.

Needless to say, if some of the following predictions prove wholly or partially correct, this year should be particularly challenging for operators, but headed in a positive direction nonetheless. The following drivers are considered the key ones affecting the marine transportation sector in British Columbia in 2017.

The commercial market

The past year was filled with difficult decisions for ocean carriers in an effort to survive exceedingly negative commercial conditions. While not a surprise, these challenges were principally driven by a lethargic global economy, record-low commodity prices, and an over capacity of vessels in most commodity trades. The overly simplistic outcome of this combination of circumstances was a race to the bottom for freight rates that made even the most agile of owner/operators shake in fear of survival, and of course some did not survive.

The most prominent collapse that unfolded was in the container sector when Hanjin Shipping filed for bankruptcy protection in August 2016. While not a surprise to industry insiders, Hanjin’s woes did send a shock wave through the supply chain while concurrently, most remaining container liners were forming joint alliances in an effort to find additional efficiencies for asset utilization.

The trend towards consolidation in the container market will undoubtedly continue in 2017 and the year will see these new alliances learn to function together including solidifying their routes and schedules. Fortunately, the future appears to include slight increases in growth that should outpace new capacity, but more favourable conditions are still distant on the horizon and likely beyond 2018 as the market sheds inefficient tonnage.

To read the full article from the February 2017 issue of BC Shipping News, please log in.