‘Huge threat to global shipping’: BIMCO warns on growing protectionism

‘Huge threat to global shipping’: BIMCO warns on growing protectionism

Global shipowning body BIMCO has issued a brace of reports in which it warns growing protectionist policies around the world pose a “huge threat” to world shipping, while boxship owners must not be tempted to bring their ships out of layup this year.

In a macroeconomic report, BIMCO covered the “possible backlash against globalization”.

“If the growth and embracing of protectionist policies throughout 2016 becomes a reality, it may pose a huge threat to the shipping industry and could disrupt trade flows and limit economic growth,” BIMCO posited.

In a separate report also issued today, BIMCO urged boxship owners to not bring their idled ships back trading any time soon.

The level of idled capacity has been high since the end of 2015, reaching a new all-time high in in the final quarter of last year. However, in the final weeks of 2016, some idled ships were reactivated while others were sold for demolition.

By January 9 this year, the total idle fleet was 351 ships with a combined capacity of 1.4m teu, according to Alphaliner, equal to 7% of the fleet.

“As BIMCO forecasts a container shipping market where the nominal (excluding reactivated ships) teu-inflow of supply matches demand growth; keeping 1.4m teu out of the active fleet going forward will be a minimum requirement to keep the pressure off freight rates,” the association forecasted.

For the charter market and charter rates, BIMCO said it is a “bad omen” to have idled capacity at all since it illustrates that there is more than enough capacity in the market already. In terms of demand for charter-in tonnage terms, BIMCO expects 2017 to be “another tough year” on pure tonnage providers.

Looking further, towards late 2017 and early 2018, BIMCO suggested the benefits of the mergers and newly established alliances in 2016 should become visible, which the association said should hopefully be by way of better profits and fleet utilisation, rather than just lower costs and cheaper offers to shippers.

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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