The maritime industry faces a year of uncertainty in 2019, underpinned by political, technological and regulatory disruption. But despite the risks, there are opportunities to be had.
The expert panel brought together for the Lloyd's List 2019 Outlook Forum looked ahead to the next 12 month – they saw a weakening trade environment, Brexit and political disruptions in emerging markets
SHIPPING faces a year of uncertainty in 2019, underpinned by political, technological and regulatory disruption.
That was the view of an expert industry panel addressing the Lloyd's List 2019 Outlook Forum on Tuesday morning, who were tasked with the difficult job of gauging maritime’s fortunes over the next 12 months.
The biggest macro risk the industry faced was political, as globalisation took a back seat in an era of bilateralism and transactionalism, Shipping Strategy managing director Mark Williams said.
The US-Sino trade war could yet prove disadvantageous for shipping, despite renewed talks during a 90-day truce between the transpacific sparring partners, he said.
“Shipping remains enthralled by demand in growth from the emerging markets, particularly China, India and Southeast Asia. Any downturn in growth in these markets is bad news and any effect trade tariffs have on these regions will be significant,” Mr Williams said.
Weak European trading, the cloud over Brexit, and political disruptions in emerging markets all threatened to destabilise trade.
“There are definite warning signs from political interference,” he said.
Environmental red tape, notably the 2020 sulphur cap, was also high on the panel’s agenda.
Wallenius Wilhelmsen vice-president of global sustainability Roger Strevens said companies that quickly got to grips with IMO 2020 would come out the other side relatively unscathed.
A similar approach applied to other issues such as digitalisation and decarbonisation.
“The challenges we face can be viewed as a threat if we’re not prepared to engage. If you approach it early, find the right level of resources and right approach then you are better off,” he said.
But while these aspects posed significant risks, they also bred opportunity.
Wärtsilä Voyage Solutions general manager advanced technology Jörgen Strandberg highlighted how — if exercised properly — digitalisation could “easily” provide a 10% operational expenditure gain, no matter what the company.
Tototheo Maritime chief executive and Wista International president Despina Panayiotou Theodosiou said that although shipowners were currently stuck in between a rock and a hard place with environmental regulation, there was still room for optimism.
“This could be an opportunity for the industry as a whole to clean up its act, and improve its reputation to the outside world,” she said.
Citi’s global shipping head Michael Parker reiterated the importance of industry response to environmental challenges ahead of next year’s sulphur regulations and 2050 decarbonisation.
"Environment, Social and Governance is a driving factor that will trigger enormous investment and is on the agenda of every company in the world,” said Mr Parker.
“If you’re a service industry, you have to consider what your customers want. The opportunity for the shipping industry is in facing the challenges of the environmental demands of customers.
“Scrubbers and other issues are very relevant, because as soon as an oil company says it is not going to run a ship with a scrubber, it changes your whole commercial relationship.”
The industry must accept this, but demand something in return, such as paying for charter fees upfront, he explained.
“The industry has to have the courage to accept this change but respond positively and aggressively.”