2019 global container shipping outlook: IMO 2020 weighs on an industry struggling to generate sustained profitability

February 27, 2019
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A number of factors, including IMO 2020 regulations, trade disputes resulting in new tariffs, and the UK's impending exit from the EU, could rock the shipping industry throughout 2019. Market stakeholders must take certain measures and be prepared to respond rapidly as these factors unfold.

  • 2018 was a turbulent year for the container shipping industry, but it might have been only a warm-up for 2019
  • IMO 2020 regulations could cost the container shipping business as much as $10B globally - and that cost could increase significantly in 2020

In an interview with SCMR, Blaeser recommends that supply chain managers begin to consider this checklist before entering into new carrier negotiations:

  1. Negotiate freight rates using a clear, fair fuel-surcharge mechanism that allows visibility into both freight and fuel expenses
  2. Consider other surcharges for fuel, congestion, peak-season, etc. that could be applied in the future and either preclude them from your terms or price that uncertainty into your base rates;
  3. Set aside some portion of volume to manage on the spot market or new freight-exchange markets, as opposed to contracting most or all volume, as many have done in years past
  4. Check carrier allocations to make sure they are spread among the large alliances as well as others, so as not to put too many eggs into one alliance basket
  5. Consider the impacts of alternate routings and services that might offer additional capacity, better rates, or other benefits compared with the impacts on inventory levels, lead times, and other variables, and look for creative alternatives
  6. And, regarding IMO 2020, stay close to what’s happening in the market throughout next year, to allow supply-chain managers to stay informed which, in turn, can facilitate communications of any cost-increase risks up the management chain.