The overall trade outlook for Canada enjoyed a positive uplift after the Comprehensive Economic and Trade Agreement came temporarily into force on Sept. 21. The trade deal was inaugurated by Canada’s international trade minister at Montreal’s new Viau Container Terminal, signifying the symbolic role of Montreal as a natural North American gateway for European trade.
Supporting additional trade with Europe will be infrastructure funding from the National Trade Corridors Fund, a C$2 billion fund (over 11 years) available for trade infrastructure for enhanced access to global markets. Adding to this positive outlook is the fact that Canada is further engaging in free trade discussions with China, Mercosur, and the revived Trans-Pacific Partnership talks.
A final point on the trade environment: China’s recent ban on imports of scrap commodities and, in particular, wastepaper products could disrupt maritime trade should adaptive measures not be rapidly adopted by exporting countries. Scrap paper imports into China are a major generator of maritime traffic for several (exporting) countries, especially on backhaul routes.
On the sectoral side, relatively tight supply discipline from carriers on the trans-Atlantic routes coupled with persistently low charter rates for Panamax vessels should favor East Coast ports going into 2018. However, average ship size on Atlantic trades is expected to increase into 2018 with the completed project to raise the Bayonne Bridge.
Tighter market discipline through unprecedented waves of consolidation in 2016 and 2017 seem to start bearing fruit as several carriers are gradually returning to positive balance sheets. However, the improved supply-balance environment may be short-lived as carriers embarked on yet another ordering spree in the latter half of 2017. Witness MSC’s order of 11 ships of 22,000 TEU, followed a week later by CMA CGM’s order of nine LNG-powered 22,000-TEU ships. There is now little doubt that ship upsizing was a strong rationale behind much of recent industry consolidation.