Value of Marine Freight Industry to Reach USD 210 Bn by 2021

Image Courtesy: DNV GL

The global marine freight industry is expected to return to 2014 levels by mid-2019 and reach a value of approximately USD 210 billion by 2021, according to the findings of research firm MarketLine.

The recovery in the industry is expected to be fueled primarily by a return of global demand as oil prices increase, and while it will take some time for the industry to reset to pre-2015 levels, the shrinking of industry value is short-lived. The players who survived 2015 are likely to have learned from this episode and to incorporate greater efficiency and cost-saving mechanisms in their businesses,Tom Hawthorn, Analyst for MarketLine, explains.

The industry has struggled in recent years, suffering from a negative compound annual growth rate (CAGR) of 3.3% between 2012 and 2016 amid an increasing oversupply and a collapse of global demand, the firm’s data further indicate.

The economic growth slowed across most of the world over this period, particularly in China, which has recently been the source of much consumer demand. This resulted in a fall in demand for transportation services in general, which forced prices down and led players to invest in their capacity to keep costs low.

 “Given how old and well-established the industry is, it is a wonder that major players did not anticipate this situation. Freight prices have been declining for several years, and rather than tightening operations to cut costs, players have decided to invest in capacity increases.

“Of course, costs are now lower per unit than they once were, but it makes little difference as few firms are managing to fill their ships. The important thing is that increase in supply relative to demand has resulted in greater downward pressures on prices, forcing many firms to operate below cost level,” Hawthorn added.

As indicated, this is evident in the example of Hanjin Shipping, which was officially declared bankrupt on February 16, 2017. The complete lack of funds in the company meant that the freight of many businesses and individuals was stuck out at sea for weeks in some cases.

“This has further eroded confidence in the industry and is likely to slow down its recovery somewhat,” he added.

 

Share this article

Follow World Maritime News

In Depth>

Events>

<< Dec 2017 >>
MTWTFSS
27 28 29 30 1 2 3
4 5 6 7 8 9 10
11 12 13 14 15 16 17
18 19 20 21 22 23 24
25 26 27 28 29 30 31

APM – ASIA PACIFIC MARITIME 2018

27 years in the making, APM is the premier shipbuilding & marine, workboat and offshore exhibition in Asia trusted by generations of industry professionals.

read more >

Mega Cargo Show 2018

The focus of the event is to bring all connected with cargo fraternity on a single platform…

read more >

Vietship 2018

Vietship is the largest and longest established exhibition in Vietnam featuring all aspect of Shipbuilding, Shipping and Offshore Technology.

Since its first event in 2002, Vietship has become the convergence and platform of advanced technologies regional and worldwide in shipbuilding and ship repair, marine equipment, waterway transportation and services, marine and offshore engineering.

After 16 years of eight consecutive editions, Vietship has affirm itself as an important event in enhancing cooperation and development, attracting investments, exchanging technology and creating ideal opportunities for trade promotion in the international maritime industry.

More info

read more >

LNG Bunkering Summit 2018

The conference will cover the obstacles facing both the shipping and port communities, exploring developments in conversion and new builds…

read more >