The shipping industry's total employment contribution has increased to 2.1 million people while the total GDP contribution is estimated to have been EUR 140 billion in 2015.
The European Community Shipowners' Associations (ECSA) update on the economic value of the EU shipping industry, commissioned from Oxford Economics, shows that the sector directly employed 640,000 people and supported an EUR 57bn contribution to GDP in 2015.
ECSA's report further indicates that, at EUR 89,000 per worker in 2015, productivity in the EU shipping industry remains above the EU average.
"The latest Oxford Economics figures underline that shipping remains a solid contributor to the European agenda of jobs and growth," said Patrick Verhoeven, ECSA Secretary General.
"Compared to 2013 figures, we see a modest increase in both employment and value-added figures."
The Oxford Economics report finds that around four-fifths of direct employment occurs at sea. Officers account for an estimated 42% of positions at sea, and ratings 58%. 40% of the 516,000 seafarers employed in the EU shipping industry are estimated to be EU/EEA nationals.
"Although it is an estimated figure, the percentage of EU/EEA seafarers appears to remain fairly stable," Verhoeven said, adding that this is a positive sign, given the challenging market circumstances most European shipping companies still operate in.
SK Shipping has become the latest korean line to announce a major restructuring.
South Korea's fourth largest shipping firm will split its shipping and non-shipping units from April 1. SK Maritime, a new entity, will take over SK Shipping's non-shipowning duties such as bunkering. SK Shipping is on track to post losses of over US$150m for the full year 2016. It is part of the SK conglomerate or chaebol that is also a big name in South Korean oil refining and telecommunications. The line has also revealed it has cancelled the period charters of 20 ships in recent months.
Despite calls from many luminaries in dry bulk for the sector to get back to scrapping, owners simply are not listening.
Clarkson Research notes in its most recent weekly report, for instance, that capesize recycling has dropped by more than 50% on an annual basis in tonnage terms with 2.1m dwt reported scrapped in 2017 so far.
"The improvement in freight rates in the dry bulk market in 2017 so far has been sufficient for owners to continue trading their oler vessels," Clarkson Research reported, suggesting bulker demolition is likely to remain "muted".
Nevertheless, very decent rates are on offer from south Asia. Lion Shipbrokers reports, for example, the Cape Tavor, a 1999-built ship, has just achieved a firm US$346 per ldt from recyclers in Bangladesh.
As containership deliveries slumped from the record 1.7 million TEU in 2015 to just 0.9 million TEU last year, the boxship sector could enter a new era of less robust fleet growth if deliveries remain at moderate levels, according to Clarksons Research.
The slowdown in boxship deliveries in 2016, alongside record levels of demolition, led to fleet growth of just 1.2% during the year, down from 8.1% in 2015. The volume of containership capacity delivered in 2016 was the lowest since 2004 and dropped by 46% y-o-y to 127 vessels of 903,662 TEU.
Deliveries in 2016 were concentrated in the larger sizes, with 89% of delivered capacity accounted for by the 8,000+ TEU sector, the highest level on record. However, delivered capacity in the 8-12,000 TEU sector declined 53% y-o-y, while deliveries in the 15,000+ sector dropped by 50%.
In the sub-8,000 TEU sector, deliveries declined 52% y-o-y to just 102,536 TEU in 2016, reflecting limited ordering in this size range in recent years, and overall in 2016 the sub-8,000 TEU fleet declined by 4.8% in terms of capacity.
Clarksons Research said that current projections suggest that deliveries in 2017 may accelerate from 2016 levels, boosted by the surge in mega boxship contracting in 2015. Deliveries in the 15,000+ sector this year are expected to be fairly similar to 2015 levels, which is likely to present continued challenges to operators managing capacity on the mainlanes.
However, overall delivered capacity is projected to remain below the 2015 level, with very limited deliveries projected in the mid-size sectors. Deliveries into the smaller sectors are projected to rise from a year earlier, although remain at a historically subdued level. In 2018, total boxship deliveries are forecast to remain relatively steady y-o-y, Clarksons Research said.
The number of cars carried by ferries increased by 1.7% from 8.6 million in 2015 to nearly 8.8 million in 2016, marking the fourth successive year of growth, according to Discover Ferries, the industry body for ferry operators.
Representing 11 ferry operators in the UK and Ireland, Discover Ferries reports that growth for car travel by sea is up by 473,000 in the past four years from just 8.3 million car crossings by sea in 2012.
The industry body confirmed that the biggest growth in ferry travel in 2016 came from an increase in domestic travel within the UK. Total passenger ferry journeys within the UK rose from 16 to 16.7 million and the number of car carryings increased from 3.7 to 3.9 million year-on-year.
Travel in Scotland, particularly in Western Scotland, performed well in 2016 as the number of passengers travelling by ferry increased from 5.9 to 6.5 million, together with 1.79 million cars.
The Isle of Man, with 557,000 passengers and 177,000 cars, and the Isle of Wight, with 8.8 million passengers and 1.8 million cars, also saw strong traffic. More than 300,000 people also visited the Channel Islands with 84,000 car journeys by sea last year.
Ferry travel between Great Britain to Ireland and Northern Ireland totalled 4.7 million passengers last year and 1.2 million cars, representing a rise of 1.3%.
3.6 million Cars to Western Europe
In total, ferry travel accounts for one in ten travellers to Western Europe. Up to 14.6 million passengers travelled between UK and France by ferry, while the Netherlands welcomed more than 1.8 million passengers by sea in 2016. Belgium and Spain both welcomed more than 310,000 and 320,000, respectively.
Last year, 3.65 million cars were carried on ferry routes between the UK and the near continent. More than two million of these cars travel via Dover, one million via Western Channel ports including Newhaven, Plymouth, Poole, Portsmouth and Weymouth and a further 450,000 cars are carried via Hull, Harwich and Newcastle.
"Over the past decade our ferry members and partners have constantly innovated and invested to ensure travel by sea is as superb experience and it's exciting to see the results of that work coming through in our 2016 results," said Bill Gibbons, director of Discover Ferries.
Clean product tankers are likely to benefit from the implementation of the global 0.5% sulphur emissions cap as of 2020 driven by the demand for new fuel oil, McQuilling Services brokerage and consultancy writes in its industry note.
As disclosed, the forthcoming cap may materially alter trade flows of fuel oil and middle distillates in 2020 and beyond as a new bunker fuel blend containing fuel oil components and gasoil is expected to enter the market.
"Assuming this new fuel will be classified as a clean product, we anticipate a material rise in ton-mile demand for product tankers, with a bias towards larger tankers (LR2) for expected long-haul transportation requirements," said the consultancy firm.
Considering the current global refining complex, East of the Suez markets are likely to be self-sufficient and meet regional demand while Western markets with less complex refining systems (Europe, Latin America and FSU/Russia) will likely switch and become net importers of the new bunker fuel.
The Middle East is projected to produce 2.81 million b/d of gasoil by 2020/21, which is 34% more than regional demand; thus McQuilling foresees this region as being a large export center for gasoil, boosting tanker demand.
"In fact, we are likely to see Middle East exports rise substantially to Europe, as well as potentially to more distant markets in the Americas," added the firm.
However, there are still some uncertainties with regard to the implementation of the regulation and its impact on gasoil having in mind that some owners are still taking a "wait and see" approach and considering the use of scrubber technology on their ships.
"Increasing use of scrubbers will likely lead to higher demand for HSFO, as opposed to gasoil and relieve pricing pressure on HSFO, decreasing the spread between these two options. With a narrower spread there is less of an incentive to install the system, particularly for vessels with a shorter trading life on the horizon. As such, we expect the minority of these owners to actually follow through on scrubbers," the industry note further adds.
Furthermore, McQuilling anticipates an accelerated level of deletions/scrapping in the beginning of 2018 bringing some ease to oversupply and supporting freight rates.
2016 was a busy year for global ship recycling, especially when it comes to boxships and bulkers. What's more, shipbreaking is expected to remain at elevated levels this year as well, bringing some ease to the shipping industry plagued by oversupply, according to Clarksons Research.
In 2016, a total of 933 ships of a combined 44.4 million dwt were recycled. This was a year-on-year increase of 14% and equivalent to 2% of the start 2016 world fleet in dwt terms, Clarksons said.
Bulker and containership recycling activity was very strong in 2016 and accounted for 65% and 18% of total demolition respectively in terms of dwt. The 0.7 million TEU of boxships scrapped was 48% higher than the previous peak in 2013, while the 28.9 million dwt of bulkers scrapped in 2016 was the second highest yearly total on record.
Demolition activity reached firm levels despite continued downward pressure on steel prices from cheap Chinese steel exports. The Indian Sub-Continent (ISC) guideline scrap price for Handysize bulkers stood at US$290/ldt (light displacement tonnage) at the end of 2016, 28% lower than the end of 2012, when total scrapping peaked, Clarksons data shows.
The proportion of tonnage sold for scrap to ISC breakers jumped to 79% in 2016, the largest share in the past decade. ISC breaking yards recycled 656 vessels of a combined 40 million dwt in 2016.
Indian breakers experienced a resurgence after a comparatively slow 2015, with 340 ships of a combined 12.5 million dwt recycled in 2016. This led their share of total demolition to rise from 20% in 2015 to 28% in 2016 in dwt tonnage.
Recycling volumes at Pakistani breaking yards were steady year-on-year in 2016, with 117 vessels of a combined 8.9 million dwt recycled. However, a number of fatal incidents at yards towards the end of the year caused temporary closures.
On the other hand, Bangladeshi breakers saw their share of world demolition decrease from 35% to 31% over the same period. However, taking into account dwt tonnage, they still represented the largest share of demolition activity, scrapping 199 vessels of a combined 13.6 million dwt in 2016.
In addition, Chinese breakers recycled 111 ships of a combined 4.9 million dwt in 2016, 11% of the world total and a year-on-year decrease of 25% in dwt terms. Green recycling facilities in China have benefited from the domestic scrap subsidy introduced in 2013, with domestic owners accounting for 87% of tonnage recycled at Chinese yards. However, domestic scrapping fell 31% year-on-year in 2016 to 4 million dwt.
Turkey scrapped the most vessels of any other nation in 2016. A total of 84 ships totaling 0.9 million dwt were recycled at Turkish yards, representing 2% of global demolition.
Looking ahead, increased pressure to ensure safer and greener ship recycling may have a future impact on the breaker landscape, Clarkson predicts. However, with around 40 million dwt currently forecast for demolition in 2017, scrapping activity is likely to remain high.
The container shipping trade will mark positive growth numbers alongside most months of 2017, however, as long as carriers maintain the current capacity levels spot rates should see small, incremental increases, according to shipping consultancy Drewry.
Growth is returning to the Asia-East Coast South America (ECSA) trade due to favourable comparisons, but container traffic remains a long way off pre-2015 numbers as spot rates are holding steady with capacity settled.
Despite a lengthy economic downturn, continued foreign investment, particularly in Brazil, has strengthened the Brazilian Real currency and boosted the country's purchasing power. Meanwhile, southbound container flows returned positive year-on-year growth rates in each of the last three months of 2016, something that was achieved in only two of the previous 28 months.
December was a particularly strong month with southbound volumes to Brazil rising by 24% year-on-year, Drewry cited Datamar statistics. The return of volume growth in the fourth quarter merely limited the damage to the annual southbound flows to -16%. The trade has not seen any annual growth since 2013 and last year's decline follows drops of 9% in 2015 and 1.5% in 2014, meaning that 2016's southbound volumes "were barely three-quarters of the level they were in 2013."
Despite improving in the second half of the year, it was the Asia to Brazil market that declined the most in 2016, falling by 21% to 770,000 TEU. Volumes from Asia to the Plate region of Argentina and Uruguay fell by 3.5% to 390,000 TEU to give it one-third of the total market, up from the one-quarter share it had from 2012-14.
Capacity on the trade has been relatively stable ever since the rationalisation in late 2015/early 2016 that resulted in only three weekly services left standing. Today the remaining carriers tend to adjust capacity via the occasional missed/void sailing, which can have a significant impact on ship utilisation.
The trade operated at full capacity in the final two months of 2016 but carriers resorted to two void sailings in January, which helped push the annual comparison down to -25%.
"Forward schedules indicate that there were another two void sailings in February to coincide with the Chinese New Year lull, but that by March the trade will once again be firing on all cylinders," Drewry said.
Chinese online retail giant Alibaba has inked a memorandum of understanding with France's CMA CGM in Hangzhou, China to seek cooperation in the digital area.
Alibaba customers using its One Touch platform will be able to book directly onto CMA CGM's services from China to the Mediterranean and the Adriatic, namely the line's MEX1 and BEX services.
Environmental performance will remain one of the "failure-is-not-an-option missions" in modern shipping amid numerous challenges in the industry, Craig Jasienski, CEO of Norway's Wallenius Wilhelmsen Logistics (WWL), said, predicting the outlook for 2017.
With the recent decision of the International Maritime Organization (IMO) to introduce the global sulfur cap in 2020, the discussions on shipping's role in reducing CO2 emission and the ratification of the ballast water treatment (BWT) mean that shipping will have to up the ante in terms of environmental performance, according to Jasienski.
WWL's CEO predicted that high uncertainty will mark 2017 as the UK vote for Brexit represents a sharp change of direction in Europe and creates a more complex backdrop for European roll-on/roll-off (RoRo) trade development in 2017.
"Although direct effects might take time to be felt, the fact that we do not know what Brexit will look like creates a climate of uncertainty where decision makers are likely to err on the side of caution," Jasienski pointed out.
Another source of uncertainty for the shipping industry is the outcome of the US election, as there is a lack of clarity around President Trump's policies.
A positive stimulus for shipping could be seen in domestic policies such as infrastructure development, while protectionist ideas are more likely to have negative effects, Jasienski explained.
WWL CEO further said that it remains to be seen what impact European elections taking place in 2017 will have and how significant they will be for the economic development in the western world.