The Global Shipping Industry is the world’s largest transport market. Its dynamics have been characterized by volatility since the 1970s and the rise of lower-cost competitors. During this time, most ships in the world’s fleet did not fly national flags and included countries of all sizes. The traditional purpose of flagging out was profit maximization, but it has become a more defensive and aggressive strategy. Most operators pursue loss minimization in these times of low markets.
In the past few years, the global shipping market, including international freight forwarding, has been experiencing several disruptions, including a shortage of container space, an imbalance in the market, and many more. These disruptions are affecting the industry and are a significant concern for the future of shipping.
The changes in the shipping industry started at the end of the twentieth century, and global trade and shipping trends began to accelerate. The introduction of digitalization and automation had already changed the shipping industry, and these trends would gradually affect the value chain. However, the twenty-first century brought some new constants and pitfalls that must be tackled before the sector can grow in the coming decades. Despite these challenges, many companies are embracing these changes to remain competitive.
As the world’s 15 largest ships continue to burn high-sulfur fuel oil, the costs associated with converting it to low-sulfur fuel will rise. Additionally, shippers will have to reduce their speed to reduce emissions. This will also reduce the capacity of their vessels and increase freight rates.
Further, shippers are also expected to increase their fuel costs. Moreover, the cost of bunker fuel will double by 2020, affecting their profit margins.
The volatility of the shipping industry, customs brokerage services and its investments have a separate effect from the variability of operational decisions. Even after the collapse of Lehman Brothers, the shipping industry continued to be characterized by volatile freight rates.
You can visit this infographic from Excelsior Worldwide Freight Logistic Corp. if you want to know more about the different conflicts that have affected the global shipping industry.
