Dive Brief:
- A recent press release by Drewry Shipping Consultants declares "container shipping has bottomed out" following the Hanjin crisis and an overall loss of $5 billion for container carriers this year.
- The analysts predict improved rates and volume for 2017, which could result in a profit of $2.5 billion. Yet, the consultancy warns supply-side challenges remain with fleet growth remaining modest between 5% and 6%, while aggressive ship scrapping continues.
- Faced with low growth, the industry is gasping for life through consolidation. Drewry predicts carriers with deep pockets will most likely best weather the current storm, with better conditions expected by 2019 or 2020.
Dive Insight:
The analysts answer the question that has remained on everyone's minds as carriers continue to post negative results with a prediction: the downturn will end by 2019 or 2020.
Predictions should always be taken with a grain of salt, though, particularly those exclaiming any industry has hit rock bottom.
Global trade is fickle, and 2016 has revealed a growing global anti-trade sentiment which can only harm the volumes of goods shipped. Hanjin may still be just the beginning, rather than the rock bottom. It's impossible to know what disruptions will affect the forecast.
In the meantime, supply chain managers wondering how to prepare should keep watch on the industry's consolidation. As alliances grow and accept more carriers, 3PLs and ports may choose to align and affect routes and pricing. Shipyards, too, provide a clue as to the industry's prospects. The storm has just begun, and it may well end by 2019 or 2020, but it's too soon to tell.
