Reklam
Reklam
Reklam
Reklam
Reklam

Negative shipping outlook for 2020 due to slow growth, trade rows

FITCH rating agency is forecasting a gloomy outlook for global shipping in 2020 on the back of slowing global economic growth, trade tensions and geopolitical risks

Negative shipping outlook for 2020 due to slow growth, trade rows

FITCH rating agency is forecasting a gloomy outlook for global shipping in 2020 on the back of slowing global economic growth, trade tensions and geopolitical risks

06 December 2019 - 19:00

FITCH rating agency is forecasting a gloomy outlook for global shipping in 2020 on the back of slowing global economic growth, trade tensions and geopolitical risks.

'The main sector risk is that protectionist measures may escalate into a protracted trade war and damage the prospects for global trade and GDP growth.



'While some upside is possible if the trade tensions between the US and China ease, the downside risks, including expected slower GDP growth in China, soft trade growth and Brexit uncertainty, will continue to weigh on demand,' Fitch said.



Further pressure on the global shipping sector is expected from rising costs related to the IMO 2020 sulphur cap, reported Rotterdam's World Maritime News.



Spikes are anticipated for operating costs (if shippers choose to use the more expensive low sulphur fuel) and/or capital expenditure (CAPEX), if they install scrubbers that remove sulphur from the exhaust or purchase new liquefied natural gas-fuelled (LNG) vessels.



'We expect most shipping companies to use low sulphur fuel,' Fitch added.



The rating agency believes shippers are unlikely to fully pass on all the associated costs to customers due to their limited bargaining power in the oversupplied market.



Fitch Ratings forecasts global container volumes to rise by 2.5 per cent in 2020. While this represents a small increase from 2019, it is below the average growth rate of 4.5 per cent seen over the past eight years.



'We expect better capacity management in global container shipping with fleet capacity increasing by 3.3 per cent in 2020, slower than 3.6 per cent in 2019. Container freight rates in 2020 are likely to remain at levels similar to those in 2019,' the agency added.



Fitch expects dry bulk trading volumes to expand by three per cent in 2020, up by 1.5pp on 2019, due to higher iron ore and other commodities volumes.



Fleet additions are expected to match this growth in volumes, and freight rates are likely to go up as dry bulk shippers will be better positioned to pass on some of the higher fuel costs.



Global tankers' supply and demand are predicted to increase by 2.5 per cent and 3.5 per cent, respectively, in 2020, supporting a better supply-demand balance. This will help freight rates to stay at levels comparable to annual averages in 2019, the Fitch report said.


WORLD SHIPPING

This news 324 hits received.