Why 2018 will be a better year for the shipping industry

Emma Haslett
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Global shipping is beginning to look up (Source: Getty)

After a tough few years for the global shipping industry, conditions will begin to improve in 2018 as demand outstrips supply for the first time in several years, according to a new forecast.

Standard & Poor's Global Ratings said demand for the three main segments of global shipping - dry bulk, tankers and containers - will begin to rise in 2018, with vessel owners increasing the sizes of their fleets as demand improves.

However, the research also suggested "poor supply discipline" could threaten the sector, as vessel owners, who are "renowned... for their poor supply discipline", rush to order new ships, leading to a bottleneck in supply and constraining charter rates.

An increase in demand would come as a relief to the sector, which has struggled with over-capacity in recent years.

The Baltic Dry, the index which measures the price of shipping major raw materials, fell to a six-year low at the start of 2016, and has crept up only modestly since. In December Maersk, the world's largest shipping line, which was hit by a huge cyber-attack last year, warned of "fragility" going into 2018.

But today Iszabela Listowska, credit analyst at S&P, said: "The lighter new vessel delivery schedule for 2018, compared with 2017, combined with our expectation of sustained imports of commodities, and longer distances travelled, point to rising charter rates across shipping industry this year - with the exception of container liner segment, which, we forecast, will see flat to slightly negative growth in rates.

"What's more, given the fundamental improvement in supply conditions, as signified by ship orderbooks being at all-time lows, we think recovery in shipping rates could continue beyond 2018."

However, shippers will also face new challenges this year: not only has Amazon announced plans to launch its own shipping company, but Boris Johnson has threatened to put a vast barrier in their way - in the form of a 22-mile bridge between the UK and and France right in the middle of the English Channel.

Read more: Amazon is launching a shipping company

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