2016 delivered two of the most surprising political upsets, namely Brexit and the Trump presidency. Time will tell whether the fear and trepidation to possible canceled trade agreements that is anticipated by the already fragile shipping industry will come to fruition.
The oversupply of dry cargo and container vessels, and weak global demand for commodities, resulted in 2016 being the most challenging year in shipping in recent times, and these market conditions are expected to persist through 2017. The weak freight market resulted in a number of bankruptcies, as well as consolidation and merger activity, and we expect to see a lot more of this in 2017.
There is an important date looming that will have an impact on the world shipping fleet, and that is Sept. 8, 2017, when the IMO ballast water treatment convention comes into force. This will require a costly overhaul to vessels dry-docking after that date that are not fitted with ballast water treatment systems, and will encourage scrapping of older ships with financially distressed owners.
To endure these challenges facing the industry, shipowners will have to maintain adequate cash reserves and protect their cargo base, while rationalizing fleets to tightly fit demand in their respective trades. Opportunity knocks for those who manage to achieve this.