Three years after the start of the pandemic, the shipping industry is preparing for its own version of the “new normal”, leaving behind a very turbulent period of drastic changes in the flow of goods, the need to adapt in record time to these new dynamics and the high prices in global transport, given the inability of supply to meet the global demand for goods. However, with the new year, the waters seem to be calming down and the sector is heading towards a normalization of its activity, not without important challenges, among which we can highlight the following:
Containership Market Outlook
The containership market has experienced a period of sky-high rates and profitability since the second half of 2020; however, since the beginning of 2022, container freight rates have been falling. The bleak macroeconomic outlook and rampant inflation have weighed heavily on consumer demand, reducing trade volumes, while port congestion relief has boosted container shipping capacity. While liner companies have cut services and canceled trips, it has not been enough to prevent spot freight rates from returning to pre-pandemic levels.
While this is good news for businesses and consumers, shipping companies know they can only see their peak profits by looking backwards. The world’s major players in shipping reported record profits in early 2022, but the industry admits it doesn’t expect to see similar numbers in the near future.
Tanker Market Recycling
On the other hand, after a couple of difficult years, the tanker market has finally made a comeback. The catalyst for the market recovery has been changing trade patterns due to sanctions on Russian exports, boosting demand for ton-miles, with a spate of new long-haul routes replacing shorter ones.
Large crude tankers are now making profits of more than $100,000 a day, while time freight rates are at their highest since the storage-driven peak of early 2020.
On the product tanker side, time charter rates are at the highest level since 2008, with reorganized global trade flows absorbing vessel supply.
Attracting and retaining staff to fill the growing skills gap is at the heart of concerns for many in the industry in the short and long term. It is a problem that has been further aggravated by the pandemic. Challenges specific to marine professionals include:
• Lack of experienced engineers; especially those with practical experience to support their technical education and knowledge.
• Reluctance to finance training.
• The challenge of improving education levels to meet the new technology implemented.
• Lack of interest from young people to enter technical and engineering fields; there is no incentive for young people to take STEM subjects and pursue engineering.
• The shortage of engineers is affecting many areas of engineering and means that there are fewer engineers passing on lifelong experiences to other engineers.
Environmental issues were the highest priority for members in the medium and long term. Marine professionals cite specific challenges such as:
• The ability to adapt to the changing environment.
• Adaptation to the new fuel to achieve zero emissions.
• Develop better options to mitigate air pollution.
• Promote efforts to reduce the carbon footprint of the fishing/marine industry, including small-scale fishing and maritime services.
• Deficient engineering in environmental solutions.
• Meeting the challenges of environmental standards, regulations and green practices.
All of them undoubtedly represent challenges that the sector will have to deal with in the coming months and years, while some of the problems that characterized the pandemic years remain in force.