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richard scott

Global shipping, a dynamic industry

Article written exclusively for Spinnaker Global
by Richard Scott, member of London & South East Branch committee, Institute of Chartered Shipbrokers

Anyone seeking a career in shipping, contemplating a job change, or pursuing further qualifications may be encouraged by the sheer dynamism of the global industry and its ongoing expansion. News items frequently focus solely on difficult market conditions and low freight rates. These reports can give a distorted impression of progress.

Problems for the shipping industry are certainly evident. World seaborne trade growth has slowed in recent years, but it is still growth, definitely not a decline as sometimes erroneously reported. In a number of market sectors the world fleet of ships has been expanding too rapidly for too long, resulting in continued over-capacity and, in turn, low freight rate levels.

But the number and tonnage of ships plying the seas and oceans remains on a solid upwards trend, reinforcing the view of an expanding industry. There are also signs of a recovery in sectors which have been the most badly affected by excess capacity..

Figures compiled by Clarksons Research show that the number of cargo-carrying ships in the world fleet has been growing by 1-2% annually in the past few years. In the first ten months of 2017, there was a 0.8% increase, raising the number to 60,100 at the end of October. In tonnage terms, using a common measurement of gross tonnes, annual growth has been in the 3-4% range during the same period. The 2017 first ten months saw a 3.2% rise to 1,198 million gt.

While this trend does not automatically increase the number of seafaring or shore-based shipping jobs available, an industry enlarging its size at least suggests some positive influences unfolding. Offsetting this feature, partly, may be the tendency for consolidation – shipping companies combining their activities to seek greater efficiency and profitability (or a return to profitability from loss-making). The result may be a lower number of jobs available in the merging companies, which is often an intention as it provides a way to reduce costs.

What other encouraging signs are visible? Expansion of sea trade is surely beneficial to the shipping industry. Last year international seaborne trade in all types of cargo reached 11,100 million tonnes, roughly 1.5 tonnes for every person living on the planet. In the past two years the growth rate slowed to 2-3% annually. However, in 2017 signs point to an acceleration, possibly resulting in 4% expansion.

How long, and to what extent these patterns persist into the future is a matter for speculation. There are many imponderables. Some pundits are profoundly gloomy about the sea trade outlook. Prospects for coal trade, a major component of the global scene, do not look great given intensifying emphasis on cleaner fuels and renewable energy sources. Then there is the as yet unknown impact of new technologies, such as advanced robotics and additive (3D) printing on the location of manufacturing, which could be negative for container trade and indirectly for raw materials.

Placing too much emphasis on the negatives may prove unrealistic though. Arguably there is plenty of potential for further increases in trade which will benefit the shipping industry. An evolving better balance between demand for, and supply of, shipping services in a number of markets could improve the viability of industry players. That could enhance career prospects for many of those seeking or changing jobs in this fascinating business.

Richard Scott, December 2017

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