Everything old is new again. Liner shipping, like all other sectors, suffered a bad year in 2016 and prospects for 2017 are just as dim. It’s curious that it was the first year in living memory that every shipping sector was simultaneously depressed and there was no in-house innovation around the corner – like a switch from sail to steam or (later) steam to oil power or, more recently, the introduction of containerisation – to provide future relief. It simply was a bad year all around.
The title and the words above, sans 2016 and 2017, were the opening paragraph of a 1982 year-end wrap up on shipping published in the February 10, 1983 edition of the Hong Kong-based Far Eastern Economic Review. It was a depressing article about poor returns, shifting alliances [liner conferences], excess capacity, mergers and bankruptcies.
But the story serves as a reminder that we’ve sailed these seas before and the author was wrong in 1982 and would be wrong again today, despite the temptation to write, “For the first time ever all shipping sectors went bad.” In reality 1982 wasn’t the first time nor will 2016 be the last time, but understanding underlying causes could prove useful in making the dips a little more palatable.
The year 2016 was indeed a very bad year for liner shipping and the prospects for year 2017 seem dim albeit with numerous caveats that could alter any prognostication.
Like the year 1982, containership operators are not alone in their distress as virtually every sector from tankers to bulk and break bulk carriers are all bumping along the bottom. Mitsui OSK Lines’ CEO Junichiro Ikeda, who was around a half-year at the helm, pretty much summed up the sorry situation, when in January 2016 he wrote in the New Year Message, “Our business climate remains severe. Fleet oversupply is still an issue, and we see few prospects for recovery with the Chinese economy slowing down and markets stuck at historically low levels for both containerships and dry bulkers. The drop in crude oil prices does provide a tailwind with the twin benefits of reducing bunker costs and spurring the tanker market.