FROM CHAIRMAN



Certainly uncertain


A very complicated year which allows us a glimpse of what is to come.




The macro political scene sets the tone for international trade and this year it had its twists and turns. The Trump-induced trade wars meant signi cant uncertainty in the three major sectors: dry cargo, tankers and containers. We were all hard pressed to foresee or even retrospectively anticipate the signi cance these would have on the shipping markets and it is clear this lack of certainty played a signi cant role. On the European scene, with Brexit looming, Italian populism, the Yellow Jackets, nationalism building, and the traditional axis within the community suffering, uncertainty is the backdrop for a region where a large part of the maritime community has its headquarters.



Uncertainty in the energy sector and more speci cally in the oil trades had an ongoing negative effect on an overbuilt market. During the latter part of the year, uncertainty converted into speculation and various trades drew attention and some positive reactions.

The real uncertainty however remains the implication of the 2020 IMO regulations. The debate on the signi cant use of scrubbers to meet requirements dominated the press and left owners and freight users divided as to the implications. It seems that larger ships with standard trades make sense and are being installed with scrubbers but few believe this is a long term solution. The industry needs to make signi cant progress and contributions to the growing ecological issues in as much as political and public perception of shipping as a signi cant polluter is growing. The uncertainty surrounding this issue has probably the most in uence on how international trade will evolve. Yards, shipowners and design companies all struggle with being in the know; LNG, solar, wind, low sulphur fuel, hydrogen, vie for market share and legitimacy. Regulations, coupled with economics, will eliminate the uncertainty but not in 2019.

Signi cant trade wars and trade sanctions added to the uncertainty surrounding everyday activity. Almost every major owner and charterer announced their withdrawal from activities sanctioned by the US - with Iran at the heart of these - despite often being legal in their national jurisdiction. The US Department of Justice in effect displaced sanctions’ penalties to compliance of major banks who set their own rules and standards. Rare was a payment or a transfer that was without incident no matter what origin or purpose. Signi cant costs and uncertainty require more cash reserves. With the impending IFRS regulations coming into effect, cash reserves will continue to be an issue.

Pressure to dis-intermediate continues to grow, with traders and brokers on the front line. Cost cutting ef ciency has led to various initiatives to promote more transparency at less cost. Electronic platforms, back-of ce and post xing tools, ship tracking and its logical evolution into algorithmic trading tools, all speed up the pace of evolution in our industry but add signi cant uncertainty as to the long term structure and functioning of shipping markets. Indices as market indicators (and by extension shipbrokers’ contributions) will surely be a growing issue.

The Chinese nance houses dominated the shipbuilding market and contributed to a signi cant increase in activity compared to 2017. Unfortunately the over-ordered Very Large Containership segment arrived at the heart of the trade wars, while the wave of tanker newbuildings ordered during the heady years of 2014/2015 felt like they were adding to long lines at soup kitchens, despite a record demolition of some 20 million dwt. Bulkers were the main concentration by the Chinese, as the dry cargo market has performed relatively well for the last few years, but some offshore and specialised sectors like ro-ro, LNG bunkering and ferries saw some renewed interest.

Undoubtedly the uncertainty in 2018 will provoke further developments in 2019. What transpired at the end of last year in the world stock markets could be an indicator but certainly tells us that uncertainty does not lead to strong markets but surely opportunities. Next year will require a constant review of strategy and a nimble approach to inevitable change.

Tim Jones
Chairman