This commentary appeared in the print edition of the Jan. 6, 2020, Journal of Commerce Annual Review and Outlook.
The outlook for 2020 will come with two major variables, compared to 2019.
One of the major hurdles will be the new International Maritime Organization (IMO) bunker regulations, which will affect all who participate in the shipping market. The new IMO bunker regulation comes into effect on Jan. 1, requiring ocean carriers without scrubbers to switch from high-sulfur fuels that they have burned in the past to lower-sulfur fuels to reduce the global environmental impact of shipping.
This comes with major implications to the carrier due to the increase in fuel costs and concerns over global supply of compliant fuel. With a worldwide fleet of over 150 vessels and over 1,800 bunker calls worldwide per year, the global impact on a carrier like BBC will be significant from a planning and cost perspective.
Another change the market will experience is an increase in carrier consolidation. Although we have seen this trend over the past few years, we believe it will only accelerate. There are many contributing factors, but the main reasons for this will be challenging market conditions, IMO 2020, and others trying to expand their global market share.
With the increase in mergers and some forming larger shipping alliances, we believe this will bring more efficiency and a better overall return for the shipping market. This consolidation will benefit both the carriers as well as shippers, as the market will be able to offer an improved service and have a more transparent market view globally. Even though 2020 will bring greater challenges than 2019, we believe we will see a stronger, more stable market as we progress through the year.