Danish Ship Finance predicts the end of freight rates

Start-up investor Rainmaking and influential Copenhagen financier Danish Ship Finance have joined forces to launch a 44-page report on how digitalisation might change shipping through to 2030 with the possibility that freight rates could become a thing of the past.

“The shipping industry has been slower to adopt digital innovations than many, putting some of its biggest companies’ entire business models at risk,” the report warns.

The study has identified 160 start-ups from the wider global scene that are working to create new digital frontiers in the maritime sector.

“While this spells risk for conventional shipping business models, it also augurs tremendous opportunity – for companies that can figure out how to capitalise on the changes,” the report posits.

The study suggests the industry is set for unprecedented changes in the coming decade, stressing that shipping is but one link in a bigger global economic and digital picture.

“The ownership structure of vessels may change radically, and business models may see profound changes when ecosystem players move beyond the vessels and integrate across the global supply chain,” the report stated, adding: “The vessels themselves will continue to be central to moving cargo from port to port. But the data they generate will be integrated into a range of services that will allow future value creation far beyond freight rates. Indeed, freight rates themselves could decouple both from the supply and demand balance and from vessels’ operating expenses – one possible scenario is that freight rates someday approach zero or stabilise at transaction-based low levels.”

The full report can be accessed by clicking here.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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