Seaborne

Demand for maritime trade will remain weak over the next 12 months


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Shipping has been grappling with a double-edged sword lately as it faces tougher environmental measures around the world, while also facing a slowdown in maritime trade, which is having a negative effect on markets. income. In fact, it is estimated that industry freight rates will not rebound over the next 12 months.

Source: Intermodal

In its latest weekly report, shipping broker Intermodal said “Global efforts towards environmental friendliness and environmental sustainability in the shipping industry are intensifying. There are currently nearly 200 countries close to agreeing on commitments to reduce pollutant emissions in commercial shipping as part of the international effort to tackle climate change. Since 2018, the ongoing negotiations have come to fruition under the auspices of the UN and the International Maritime Organization (IMO), which were primarily aimed at finding common ground on how shipping as a whole will reduce its GHG and toxic emissions. From containers to tankers, the industry is looking for a way forward that will include a level playing field for all stakeholders involved ”.

Source: Intermodal

According to Intermodal’s SnP broker, Mr. Zisis Stylianos, “currently the main point of contention between negotiators is the method and severity by which penalties will be imposed for non-compliance with established and agreed emission standards. . European countries believe that the most environmentally damaging ships should be phased out by 2029 if they are unable to meet all established emission standards. Other countries, such as China and Japan, consider the European proposals too strict and recommend mechanisms for fines or sanctions in the event of non-compliance with environmental regulations ”.

Mr. Stylianos added that “on the other hand, organizations such as the MEPC are seeking and advocating for the imposition of measures even stricter than the current ones. Indeed, they believe that emissions from maritime transport will continue to increase in the years to come. High market and investment uncertainty caused by looming regulatory restrictions associated with the COVID-19 pandemic has significantly slowed global maritime trade. According to the IESC report, the pace of international economic activity remained slow throughout 2019, but in 2020 the data changed dramatically due to the COVID-19 outbreak. The World Trade Organization (WTO) predicts that world trade is expected to decline by around 20% in 2020. Many shipping sectors have faced a sudden and sharp drop in demand, which in turn has significantly affected tariffs and revenues. In the dry bulk sector, the average daily revenues between January and April 2020, compared to 2019, were lowered by more than 85%, 40% and 35% respectively for the vessels Capesize, Panamax and Supramax ”.

Source: Intermodal

The Intermodal broker added that “the closures in Europe and North America have had a significant impact on employment rates. The International Monetary Fund has announced that the COVID-19 pandemic will likely drag the global economy into a recession worse than that of the 1930s and warns that the prospects for a global recovery are extremely uncertain. The slowdown in shipping is expected to last for more than a year and shipping activity is unlikely to improve over the next few months. Since shipping is a global industry, the decline in its performance is also due to the fact that a large part of its business is located in the southern hemisphere, where major commodity-exporting countries, such as Brazil, are significantly and negatively affected by COVID. -19 Pandemic. It remains to be seen whether the potential release of a new vaccine in the coming winter months will trigger the start of a recovery phase in the maritime sector. In addition, it will be interesting to see if and to what extent the imposition of more stringent emissions regulations will affect the much needed recovery of the industry, ”concluded Mr. Stylianos.

Source: Intermodal

Nikos Roussanoglou, Hellenic Shipping News Worldwide

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