Maritime Shipping Trends to Watch in 2016

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Intermodal Containers Increase Capacity. World Shipping Council

 

Conditions that favor consumers are often difficult for the carriers who bring ninety percent of all goods to ports and terminals around the world. As 2016 is looking good for consumer economics, it may be another difficult year for ship owners.

Cargo volume is expected to rise slightly since consumers will spend some of the savings gained from lower fuel prices. Forecasts in late 2015 say the North American market will likely see crude oil at around $20 USD per barrel by the end of the second quarter of the year.

All that buying and increased volume does little for a container ship market that is in a position of surplus capacity. Even though many of the less profitable ships have been laid up for years, the industry still struggles with very low rates and increasing costs.

The only ships with a good profit margin are the new mega-box ships that are creeping up on 20,000 TEU capacity per ship. These ships, like the Triple E, are designed with a new, flexible philosophy of operation. It’s no longer the case where a ship is engineered for a specific route and speed. One of the best things to happen to ship efficiency in many years is the multi-speed hull design.

Active hull components are in design phases so we may see the first prototypes of configurable bow sections, vortex generators, and foils. This will be another step towards an aware and autonomous vessel. That trend of automation will stay strong in 2016 and it seems we may see some of the first real-world applications come in the form of micro-cargo vessels that are meant for humanitarian and disaster relief.

RORO vessels will stay busy since the United States saw a record year of new automobile sales in 2015. Conditions are expected to improve in favor of the consumer in 2016 so that trend may spread globally and in scope which means commercial equipment orders can fill some of the empty space on returning ships.

Dry bulk is expected to rise along with global construction activity which will be driven up by cheap fuel and historically low interest rates. The Great Lakes and North American inland fleets will see continued stability while the developing world will see more suitors for its business as companies explore tiny sources of revenue.

The decision to allow crude oil exports from the United States for the first time in forty years will give a lift to the slumping and beat-down resource extraction sector. A huge number of assets were scrapped in 2015 and that will continue in 2016. The exodus of workers from oil and gas jobs will impact the whole maritime labor economy and the fallout is unclear.

Operations in the Arctic are one place where extraction will grow, but at a slower pace than in the past. Just because one giant company said they were cutting back on exploration in the region doesn’t mean that the Arctic gold rush is dead, not by far. The expectation of unusual and unsettled weather patterns in the Arctic are being blamed on the very strong El Niño effect in the Pacific Ocean this year. Storms and rapid ice movement will reduce the cargo passage activities of past years which were based more on the Right of Navigation and publicity stunts than an economically viable Northwest Passage.

The looming elephant in the room for 2016 is the ratification of the IMO Ballast Water Management Convention.  It could mean the end of many small operators whose operations will be absorbed by one of the larger players in the cargo industry which is able to withstand the financial burden of this agreement.

Retrofitting ships is expensive and the previously mentioned surplus of cargo ships globally means there are few new builds on the order books at shipyards. Those that are being built are already high-tech, expensive vessels of a huge scale. Smaller facilities will benefit from retrofits for years as waivers expire and the global fleet is moved to responsible ballast water management practices.

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Bruno, Paul. "Maritime Shipping Trends to Watch in 2016." ThoughtCo, Jan. 1, 2016, thoughtco.com/maritime-shipping-trends-to-watch-2292956. Bruno, Paul. (2016, January 1). Maritime Shipping Trends to Watch in 2016. Retrieved from https://www.thoughtco.com/maritime-shipping-trends-to-watch-2292956 Bruno, Paul. "Maritime Shipping Trends to Watch in 2016." ThoughtCo. https://www.thoughtco.com/maritime-shipping-trends-to-watch-2292956 (accessed January 23, 2018).