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1. When it comes to fuel choice, the devil is still in the detail

The fuel supply sector was out in force last week at the industry’s biennial fuel fandango Sibcon, offering comforting assurances that they had supply and quality concerns covered. Technical specs were being touted and guarantees on compatibility and post 2020 port operations were being spelled out in detail.

So far, so slick, but concerns remain. Not least from the suppliers themselves, who argue that one of the side-effects of the 2020 fuel requirements has been to highlight how unprepared many shipping companies are in dealing with the technical specifications of fuel management. Fuel procurement is not the same as fuel management, argue the suppliers, but not all their customers have the technical expertise to deal with the complexity of the post-2020 regime.

As for the anticipated clarity over supply issues, it’s still not a done deal, particularly when it comes to high-sulphur fuel oils. Contrary to assumptions of an oversupply of HSFO come 2020, the scale of this glut might be less than originally anticipated as refineries take active steps to reduce HSFO production as scrubber uptake continues to underwhelm compared with initial projections.

The discount of HSFO to low-sulphur alternatives is thus subject to change depending on how the demand-supply dynamics play out. That effectively introduces uncertainty into the payback period for shipowners who have invested billions to install scrubbers.

More from Lloyd's List:
Rising fuel costs set to push up container freight rates

2. And the big picture is still alarmingly out of focus for most

Answering the big questions being raised during Sibcon by looking solely in terms of the 2020 deadline is myopic in the extreme. That was our view heading into the debate and it remains unchanged by what we heard.

Fuel choices are being made, or deferred, today amid a wider transition that is not simply shipping specific. Whether owners recognise it or not, shipping is now seen as part of a wider value chain. It used to be that shipping was out of sight, out of mind, but any major shipper considering who is moving its goods by sea looks at such decisions as part of its overall carbon footprint and sustainability commitments.

It was heartening to see, then, that the heads of some of the world’s leading shipowners and charterers signed a pledge last week to lead work to reach the ambitious carbon emission reduction goals set by the International Maritime Organization earlier this year. Executives from Cargill, Trafigura, Maersk, Euronav, GasLog, Ocean Network Express and MISC were among 34 leaders who committed to support the aim to cut greenhouse gas emissions from shipping by at least 50% by 2050 to help restrict climate change.

Bravo, we say. But let’s also recognise that the decarbonisation of shipping is a necessarily inevitable transition that will likely be imposed upon most companies — and make the current sulphur scrap look like a mild inconvenience by comparison.

 

3. Big beast box bosses sing the blues

There is, of course, a world of news outside of bunkers and the 2020 deadline, so we were delighted to sit down last week with two of the container sector’s most powerful leaders to chew the fat.

APL chief executive Nicolas Sartini talked to us extensively about Iran, the US-China trade war and why geopolitical stresses and regulatory burdens, could yet put a dampener on an otherwise enticing outlook for transpacific trades. We also sat down with Hapag-Lloyd chief executive Rolf Habben Jansen and the conversation inevitably turned to… fuel.

Carriers have been accused of lacking transparency in the surcharges they will apply to recover costs from customers to pay for low-sulphur fuel, so Hapag hopes its new mechanism will answer those criticisms by showing how the calculation is made.

It’s a difficult period for the top box executives right now. Higher fuel costs = weaker container lines = trouble for lessors, as Wells Fargo put it succinctly in a recent note, shortly before predicting Hanjin 2.0 looming. That may be overstating the case somewhat, but headwinds from both IMO 2020 fuel regulations and the impact of tariffs and trade protectionism have certainly created significant downside risks for many of them.

More from Lloyd's List:
Global box growth comes to a standstill

 

4. Growth stalling? Perhaps, but let's see what China has to offer

Container volume growth on ocean bound trade lanes braked sharply in August, as weak performances on key shipping routes meant box numbers were little changed compared with last year.

It’s all part of a bigger picture. Christine Lagarde, managing director of the International Monetary Fund, indicated last week that the IMF’s growth forecasts were likely to be revised down this week at its annual meetings in Bali, Indonesia.

Similarly, China’s economic index is down, indicating the country’s weakening manufacturing sector, employment and exports. So now all eyes are on the government policy responses to smooth the cycle. China's central bank said on Sunday that it would move to free up 750bn yuan ($109bn) for new lending in an attempt to prop up growth. That in itself will not be enough to change much, but it is part of a trend towards credit relaxation and tax cuts and separate reports suggest Beijing is expediting plans for infrastructure projects.

A lot will depend on the scale and pace of the policies, but analysts are optimistic that this will help improve demand for the fourth quarter of this year and 2019, offering a solid demand boost to the dry bulk shipping market at a time when fleet supply growth is running at near all-time lows.

 

5. Who are leading the global maritime influencers?

It’s that time of year when Lloyd’s List’s Editorial team begins the search for the Top 100 People.

Last year’s top five was dominated by Chinese: politicians, bankers, shipowners. It is hard to see how this trend could be reversed in the coming years, given China’s ascendency on the world stage.

Since then, the disruptive forces in the world have multiplied. Substantial risks threaten market stability including protectionist rhetoric, trade wars, and a rise in global geopolitical tensions. Uncertainty continues to reshape business strategy. So, who do you think deserves to be at the top of this year’s rankings?

Join the debate on Twitter and let us know @Lloydslist

More from Lloyd's List:
Top 100 from 2017 - The most influential people in the shipping industry.

 

Listen to the latest Lloyd's List Podcast
This week Lloyd’s List Editor Richard Meade is in Singapore taking the temperature of Asia’s shipping market. On the agenda: why the reshoring and near-shoring effect of the trade war is bad news for container shipping; how the box sector BAF battle is shaping up and why the looming 2020 deadline is dominating pretty much every discussion we’re having in Asia right now

 

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