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IMO – The Doomly Gloomy World of Shipping

12 Feb 2019

The following blog post was prepared by Apurva Mali in his personal capacity and shared with Manifold Times. The opinions expressed in this article are the author’s own and do not reflect the view of Dubai-based commodities trading firm Ennero where is he employed as Trading Manager.

In My Opinion, (hereafter labelled IMO), outlook for 2019 for the Global Maritime Industry is not-great. But when has it ever been Great?

Yes shipping is cyclical with sharp peaks and prolonged troughs, and in my 16-year career, nothing I’ve seen overall, IMO, has come close to the highs of the pre-2008 peaks.

How does one know if the maritime industry will do well or not this year? And who has the more accurate synopsis? The ‘outlooks’ vary and point to all the varying 360 degree opinions. In this case, lets imagine the actual ship to represent the shipping industry and the external weather conditions represent the external forces the ship (industry) has to contend with. The industry is often just like a large ship changing its course without control, when its own power or steering ability fails to work, and is at the mercy of the wind and the seas. World-trade-related macro figures, brokers’ reports, shipowners and financier’s’ views all reveal a different story in line with their own understanding and objectives.

A few shipowners I spoke to while writing this, from different segments (dry bulk tanker and offshore) revealed in the simplest of words, ‘Market is bad and competition eroding margins’, and one of them even commented, ‘I’d rather be sunbathing at the beach than commenting on freight rates’, only watching ships from a distance. Perhaps ships (and the industry?) do look much prettier and calm from a distance.

IMO, the maritime shipping industry is indeed a ship without its own power or propulsion. It continues swaying and swinging within its ‘6 degrees of freedom’ (FYI, the 6 degrees are: pitch, heave, roll, surge, sway and yaw), at the mercy of the external forces of world trade, protectionism, new-fuel-regulations, a slowing China and supply-demand imbalance. And this year, even more than in 2018, it is super-obsessed with the new sulphur-emission regulations expected to come into force in 2020.

It only remains to be seen if the external forces will keep pushing the industry against its own free will and decision making. Amongst many other weather forces in 2019, IMO, it will have to also contend with two, very significant events taking place, when the world’s two largest democracies (India and USA) will host their General Elections, with each incumbent leader trying to make it Great, once again.

Readers who are interested to reach out to Apurva Mali may contact him at the following address am@ennero.com or mobile number at +971 50 605 1905.

Published: 12 February, 2019

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