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Container Shipping Facing Great Challenges in 2018
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Source:container shipping

The container shipping companies are facing great challenges. Specifically, their profit will be cut amid stricter environmental regulations and soaring oil prices.

The performance of shipping companies in the next 18 months will depend on their asset quality, size and diversification, said German rating agency Scope Ratings, explaining that they are likely to become profitable in 2018 only with the biggest and most efficient fleets.

One of the major issues faced by liner majors is the high oil price which has seen carriers introduce emergency bunker surcharges as a means of recovering costs.

Scope expects a surge of around 25% in bunker prices this year compared with last year, squeezing thin profit margins despite robust global economic growth and active trade, notably in Asia.

Scope analyst Denis Kuhn pointed out that the market's excessive capacity is pushing down freight rates, but the analyst expects the shipbreaking activities to speed up in the second semester of 2018 and 2019 because of the new environmental regulations.

The trade disputes between the US and its major trading partners are another factor weighing on the container shipping market. However, Scope said that the world's overall trade volumes might see slight impacts, noting that those with large and diverse fleets which can adapt themselves to new trading patterns will have more opportunities for making profits.

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