Executive Briefings

A Grim 2017 Expected for Container Shipping

The outlook for global container carriers remains grim at the outset of 2017, says analyst AlixPartners in their latest industry report.

The industry continues to be plagued by the same challenges since the onset of the 2008 financial crisis. Events like Brexit and the new U.S. administration's policies threaten to add insult to injury as they inject even more uncertainty into the future of global trade. Spreading protectionist stances could reverse the past several decades’ steadily easing trade barriers that have supported the growth of containerization since the 1950s.

Yet hope remains for the shipping industry, says the report. Rate levels on major East-West trades improved — dramatically in some cases — in the fourth quarter of 2016.

At the tail end of peak season, Hanjin Shipping filed for bankruptcy, sending shock waves through spot rate markets and exposing the flaws of the alliance system in the process. The bankruptcy helped create a rare seller’s market that lasted through the close of 2016.

Carriers managed to sustain those higher rate levels because of an unusually early Chinese New Year, which should buoy financial results for the fourth quarter.

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The industry continues to be plagued by the same challenges since the onset of the 2008 financial crisis. Events like Brexit and the new U.S. administration's policies threaten to add insult to injury as they inject even more uncertainty into the future of global trade. Spreading protectionist stances could reverse the past several decades’ steadily easing trade barriers that have supported the growth of containerization since the 1950s.

Yet hope remains for the shipping industry, says the report. Rate levels on major East-West trades improved — dramatically in some cases — in the fourth quarter of 2016.

At the tail end of peak season, Hanjin Shipping filed for bankruptcy, sending shock waves through spot rate markets and exposing the flaws of the alliance system in the process. The bankruptcy helped create a rare seller’s market that lasted through the close of 2016.

Carriers managed to sustain those higher rate levels because of an unusually early Chinese New Year, which should buoy financial results for the fourth quarter.

Read Full Article