This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.
Change, most of the time, is not a bad thing. The changes, however, that the shipping industry has endured in 2019 have been profound and impactful to every BCO’s business. And we see the following trends to continue in 2020: trade tariffs, vessel capacity constraints (blank sailings), slow economic growth, digitization and automation efforts, and the implementation of new low-sulfur fuel regulations, to name a few.
In the past 12 months we have been dealing with a recession in the chemical industry. Only recently have chemical company stocks recovered some. We see future challenges with the ever-moving targets of trade tariffs, which make it difficult for many producers to sell their products. A strong dollar is another negative for North American exporters. We expect to see an increasing number of blank sailings, which seems to have developed into the best weapon for the ocean carriers to control capacity. Orderbooks for new capacity are way down; economies are growing slower or even projecting no growth in the future.
And then there is the new low-sulfur regulation which has started to impact bottom lines for BCOs, NVOs, and carriers. Unfortunately, as of this writing, we are not anywhere close to fully understanding the financial impact to any of the parties. We only know that cost will go up, but not exactly by how much. I see this as the biggest challenge for 2020 for anyone involved in transportation of goods.
We end on a positive note with digitization and automation. The very overused word “blockchain” has been replaced, in part, by TradeLens and other buzzwords. Inasmuch as I believe we are still years away from true blockchain, everything seems to be heading in the right direction. The future benefits of a tool like TradeLens or others will be tremendous.