Maritime transport is booming and container shipping is one of the healthiest links in the supply chain, despite being anchored to global trade.

The maritime industry and global trade have been interdependent for centuries, and today seafaring vessels carry 90% of all traded goods. Generally if trade falters, the shipping industry sinks. This was clearly the case in the wake of the global financial crisis. But in 2020, amidst a slowdown wrought by the pandemic, container shipping is poised for robust profits. Oil tankers and dry-bulk vessels that transport iron ore and other commodities are also expected to fare well.

Global trade itself has not been hit as severely as expected. In April the World Trade Organisation (WTO) forecasted trade volume contracting by at least 13% in 2020, or as much as 32% in the worst-case scenario. This month the WTO adjusted that figure to 9.2%. The outlook was similarly dire for maritime earlier this year. Consulting firm Drewry warned that port visits by ships worldwide could decline by 16% in the second quarter. They ultimately fell only half as far, by 8%.

One reason maritime transport is thriving through COVID-19 is the consolidation that followed the previous downturn. Prior to the financial crisis, demand for container shipping was growing by about 10% a year. Then came a sharp reversal of fortune. According to The Economist, “The order book swelled to the equivalent of 60% of the entire fleet when Lehman Brothers collapsed in 2008.” The industry was left with an untenable degree of overcapacity.

Competition turned fierce, and in the 2010s joining forces to cut costs and gain market share was a matter of survival. In 2017, three mammoth global shipping alliances formed which now control 85% of capacity across the Pacific and nearly all between Asia and Europe. The seven biggest container shipping firms own three-quarters of the global fleet, up from 55% in 2016, Jefferies reports. These drastic structural changes may have made the industry better able to absorb the impact of this year’s economic blow, and to seize the opportunities of the recovery.

This resilience was not immediately apparent, and at the onset of the current downturn came numerous cancelled voyages, called “blank sailings”. By May a historic 12% of the global container fleet was idled. Now only 3% remains so, as economic recovery generates a surge in demand. Freight rates have skyrocketed, and according to Lars Jensen of consulting firm SeaIntelligence, the container industry is headed towards record profits this year.

The key to staying on course will be to avoid repeating past mistakes by exercising restraint with regard to supply. Maersk, the world’s top transport firm, is focusing on profitability rather than volume or market share and investing in supply chain integration. The order book is now equal to just 7% of the fleet, due not only to bitter experience, but also to stricter environmental policies. The UN’s International Maritime Organisation aims to cut the industry’s carbon emissions in half by 2050, relative to 2008.

The maritime industry’s good fortunes will likely not be spread evenly across segments. More specialised tankers and dry-bulk carriers face greater difficulties, as these portions of the supply chain are more fragmented, making it harder to keep capacity in check. The owners of oil tankers are benefiting from low oil prices, as excess supply drives up demand for storage. Dry-bulk, the world’s biggest freight market in terms of volume, is also starting to pick up speed.

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