2017 Logistic Predictions

Mar 2, 2017News

The shipping industry itself is incredibly difficult to predict and 2017 is no exception – just look at the volatility of 2016. With unprecedented shipping consolidations, the collapse of Hanjin, and the election of President Trump (bringing in a whole slew of new trade negotiations), the shocks endured by the shipping industry were hard and the after-shocks are just beginning.

That being said, and with our ear to the ground, there are a few predications we can make for an otherwise unpredictable 2017.


2016 isn’t over.

The historic shipping consolidations that took place last year will play a large part in determining the course of 2017. (Think, Hanjin collapse, Cosco/China Shipping merger, CMA, CGM and APL, Hapag-Lloyd and UASC, as well as Maersk Line and Hambug Sud.) These mash-ups led the shipping industry to the greatest state of change in over 60 years.

Many of the vessel-sharing alliances the were established in 2016 won’t begin operation until the second quarter of this year, presenting shippers with additional logistic challenges. The over-capacity issue carriers have been dealing with hasn’t gone away, and the slow demand growth and decreased rates they have been experiencing over the last few years have them set up on very shaky legs.


It’s not all doomsday though.

JOC predicts that container ship fleet growth is expected to accelerate around 3.1 percent in 2017 – that’s faster than 2016. While shipping freight rates recovered a bit in the 4th quarter of 2016, unless demand increases alongside fleet supply, shippers will continue to take advantage of low rates (This is not good for carriers).

Any forecasted economic growth might not be truly realized until the “mega-“ BCO’s settle on their rates for the 2017/2018 contract year. The NVOCC community usually finds themselves at the mercy of the results of these final negotiations with mega-BCO’s, which funnels down to the ultimate buy/sell rates at the customer/user level. The speculation of higher container rates in the 2017/2018 contract year will be predicated on the results of the mega-BCO negotiations.


The “right now” mentality.

E-commerce has reshaped our delivery expectations and demand driven spirit. This increase in the on-demand, I want it now attitude will force companies to shorten their planning cycles and become more data centric, increasing their ability to make real-time decisions quickly and efficiently. Everything has to happen faster, and those who can’t (or refuse) to keep up, will be left in the dust (or wake as it were).


Trump on trade.

Earlier this year, Trump took his first step in reshaping the U.S. stance on international trade. Withdrawal from the Trans-Pacific Partnership (while seemingly inevitable) spoke volumes both domestically and internationally. All trade deals are on the table (NAFTA’s next) and nothing is set in stone anymore.


The age of the autonomous vessel.

The Finnish government is funding autonomous ship research and foresees an autonomous marine ecosystem by 2025. Rolls-Royce is already working on smart ships that would function much like a drone and could be controlled remotely from a central command building.

Other companies have also begun small pilot tests accessing the viability of autonomous vessels and Rolls-Royce has formed a collaborative partnership with the VTT Technical Research Centre of Finland Ltd. The ways things are progressing, there’s a chance we may see a small load carried, sans humans, this year.

While the future for shipping isn’t looking shiny bright, it’s not stormy either. Multiple carriers have tightened up their belts and the consolidation scramble of 2016 will hopefully help smooth the waters for 2017. In this day and age, another carrier collapse isn’t out of the question, but you can bet that any hard lessons learned over the course of last year were taken to heart – and nobody wants a redo.









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