Two words sum up the headline issues for the liner shipping industry in 2017: economics and the environment.
Economics
The liner shipping industry is undergoing the most drastic restructuring in its history. Global trade growth is soft, and there is too much capacity. Freight rates are unsustainably low, and carriers are implementing cost reductions to mitigate the revenue loss. There have been more large-scale mergers in the last two years than in the previous 15, and alliances are adjusting to address the new ownership structures. For all of that, the industry remains unconcentrated and highly competitive.
Environment
2016 brought three milestones for environmental protection. All will require implementation efforts in 2017 and beyond.
First, the IMO’s Ballast Water Convention met the requirements for entry into force, which will occur in September 2017. Over the coming years, tens of thousands of ships will install ballast water treatment systems. Those treatment systems should largely eliminate the transfer of invasive species around the world through ballast water.
Second, the IMO decided that the global 0.5 percent marine fuel sulfur cap will become effective Jan. 1, 2020. For regions that have not already adopted emission control areas, this global requirement will significantly reduce air pollution from ships.
Third, the IMO expanded its response to CO2 emissions from shipping. Adding to vessel efficiency standards that started in 2013 and that become stricter through 2025, the IMO in 2016 adopted a fuel consumption data reporting system. That data will be used to create a long-term solution for vessel carbon emissions under a “roadmap” that the IMO also adopted in 2016. The hard work begins this year on how to make the most efficient form of transportation on the planet even more efficient, while continuing to provide the transportation that is the backbone of world trade.