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Maritime outlook 2019

What will we see in shipping this year?

Another year begins for the maritime industry with new opportunities and new challenges. What will the next 12 months bring with the IMO’s 2020 sulfur limit just around the corner? The Director of SKF’s marine business unit, Mathias Rusch, shares which key topics, events, and trends he expects will shape shipping in 2019.

After numerous shipyard closures and increased consolidations as a result of the ship building crisis, 2018 was a year of recovery and steady growth for the maritime industry. Mathias Rusch, what initial thoughts do you have entering the final year before International Maritime Organization’s (IMO) 2020 limit on sulfur emissions enters force?

Mathias Rusch: Heading into the year preceding the IMO 2020 global sulfur limit, we can assume that environmentally friendly shipping will remain a huge topic, with systems such as scrubbers and emissions monitoring systems gaining momentum and market growth—especially in the cruise sector. Scrubbers in particular are on the uptake and likely to gain popularity in light of praises sung by the 25-company-strong Clean Shipping Alliance formed in October. New systems for ballast water management will also certainly grow in importance and popularity following on from the Ballast Water Management Convention introduced in 2017.

Is there an area in the industry you particularly look forward to seeing progress this year?

What I find particularly exciting is the emerging technology and increased digitization of the sector. Unmanned autonomous vehicles (UAVs) have already taken to the water and presented viability for uses such as detecting oil spills. It’s possible they will be approved by authorities both globally and locally for further purposes in the year ahead. We can also expect a great deal of focus on digital twins and alternative production methods like 3D printing. These digital technologies are starting to revolutionize the sector and were a prominent theme at events such as SMM this year.

What potential do these technologies offer to the maritime industry?

Such technologies can be used to enhance shipping practices, providing onshore teams with clearer insight into onboard practices such as with tools for remote management. Connected and automated systems are already showing potential to accelerate processes and increase efficiency through monitoring component condition, tracking emissions levels, or alerting crew to opportunities for fuel reduction. In freight, they can be used for monitoring and controlling temperature and humidity to ensure best possible conditions for cargo. I think we can expect huge growth in the market for these technologies which could quite possibly become standard practice in the future.

World seaborne trade

World seaborne trade volumes, in the sense of goods loaded and unloaded in seaports, expanded in 2017 by 4.0%—and is forecasted to rise continually for the next ten years. 10.7 billion metric tons of goods were loaded worldwide in the same year, with Asia being the largest trade region. Interestingly, developing countries switched from exporting to importing, with a global share of goods unloaded growing by a huge 63%.

Figures taken from UNCTAD, 2018.

Do you see any factors outside of the maritime industry’s control that could present challenges?

It’s fair to say that political shifts could present new concerns for global trade in the coming year. It remains unclear how Brexit could impact ships entering British ports after the UK becomes independent of the EU, but there will likely be new considerations to take into account. The US-China trade dispute, and new imposed tariffs as a result, also present considerations and could threaten global trade. That being said, the Belt and Road Initiative (BRI) in China is set to increase trade and contribute to global fleet growth—which continues to rise steadily with the exception of shipbuilding. With strong trade growth along the Maritime Silk Road in and out of China and the US losing out, a change in global trade patterns is possible.

Could you elaborate on the “exception of shipbuilding” just mentioned?

Shipbuilding in the last few years has fallen after a huge surge surrounding the “peak years” of 2006 and 2008. And, the same can be said for the capacity of shipyards in production which is likely to fall another 10 or 15% this year. Fleet growth and ordering and investment has always shown market volatility and experienced a record low in 2016. But it is on the increase, with Japan, Korea, China continuing to dominate the shipbuilding market. If you take a look at historical charts, a pattern emerges that suggests that we are entering the second half of a third super-cycle that will see a huge surge in shipbuilding in the next ten years.

If you were to make a prediction on future major trends coming up in 2019, what would you say?

Fuel alternatives, for sure! New methods of propulsion and cleaner fuels will be vital to meeting stricter regulations. Demand for LNG is growing and already on the orderbooks for many new ships and retrofits next year. Renewable propulsion for industrial maritime vessels will be a huge aid in greener shipping and we may see steps being taken toward this in 2019. I think an important mention here though is ship recycling. There is a huge rise in demand for conscious and sustainable methods in all kinds of industries—the consumers want it. And shipbreaking is due a facelift. In May 2018, China stated it would implement a ban on the dismantling of foreign ships on its shores coming into effect by early 2019. Further regulations, incentives, and initiatives for ship recycling could start to make waves over the next few months.

Final comments?

Last year’s maritime outlook expressed that a transformation would occur in the sector in 2018, which I think was proven true. There were movements in the industry in 2018 that signaled a readiness to adapt and prepare for post-2020 shipping. I look forward to what’s to come as a result.

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