Online freight forwarder iContainers says 2019 was a year of uncertainty for the shipping industry, and that while certain sectors have seen improvements, the industry should remain alert for the challenges 2020 will bring.
Highlighting 2019’s events, iContainers says preparation for IMO 2020 and the United States-China trade war have been some of the biggest challenges for the industry.
“Aside from IMO 2020, the tariff war has been stealing all the headlines, causing trade to shift, and basically affecting all trade lanes this year,” says Klaus Lysdal, vice president of operations at iContainers.
“Throughout the year, we have seen a slowdown in traffic as companies were using their larger-than-normal inventories from the import boom at the end of 2018. This decreased the regular import flows and caused a shift towards using suppliers at other origins.”
But amid the incertitude, Mr Lysdal notes that positive developments have been observed on various fronts, particularly the trucking shortage in the US.
Following the implementation of the ELD mandate, trucking capacity in the US was particularly tight not only for large parts of 2018 but also going into 2019. After much progress, 2019 has been a much calmer year.
“The biggest improvement was certainly seeing the trucking industry return to normal again this year. There’s nothing like a shortage of supply of something to remind you how much you depend on it,” says Mr Lysdal.
And despite the final phase of the ELD implementation taking effect last month, Mr Lysdal isn’t particularly worried about its effects.
“Considering the devastation the industry faced the first time around, one can’t really be blamed for feeling on edge about the final implementation phase. But the worst is over and I reckon a minimal and relatively simple transition to close the ELD chapter.”
What 2020 has in store for the shipping industry
Even though the shipping industry will have new challenges to face in 2020, most of it will have a familiar feel. According to iContainers, the three themes that will need to be monitored this year have already featured in large parts of the previous years. These include the ongoing Brexit negotiations, the US-China trade war, and IMO 2020.
“We will have to see what ends up happening with Brexit and how that affects European trades. The industry will also continue to adapt to the development of the tariff war. At least the industry as a whole is used to changing climates and usually adapts pretty quickly to any changes,” says Mr Lysdal.
“As for IMO 2020, carriers should already have everything in place. So it’s mainly just how the increased fuel cost will affect pricing and if carriers keep a united front on the fuel cost or if it becomes a strategy pricing tool for some of them,” says Mr Lysdal.
Aside from these recurring headlines, one particular growing issue that iContainers feels will need to be addressed this year is onboard fires caused by misdeclared cargo.
According to the Barcelona-based forwarder, part of the problem stems from misinformed shippers and inept practices.
“At this point, forwarders are still taking shippers’ word for what’s loaded in the container. But from a forwarder’s perspective, that tends to increase the risk that clients who are not well-versed in hazardous cargo and looking to ship it may come to forwarders. This puts the forwarder at risk, especially if the shippers’ paperwork is not in order,” notes Mr Lysdal.
Mr Lysdal says this is an imperative problem that needs to be addressed urgently, especially given the growing vessel sizes, whose larger capacities increase the risks of having misdeclared cargo on board.
He warns that failure to tackle the problem before it gets any worse could ultimately lead to regulations that could cause an increase in shipping costs.
“Some of the carriers’ initial steps to increase fines may help. But if this persists, it could result in mandatory manual inspections or similar moves to protect against these types of issues. Something like that would obviously lead to additional costs involved with shipping,” cautions Mr Lysdal.
“But something has to happen as we cannot keep having fires happening onboard vessels.”
Digitalization and automation
In terms of digitalization, Mr Lysdal expects headway to be made and to a much larger extent as digitalization slowly becomes an industry standard.
“Both digitalization and automation will become less of a buzzword, mainly because a large part of the industry has already moved beyond the adoption phase to the development phase. It’s almost to be expected that everything being developed or purchased these days will include some level of automation or digitalization,” says Mr Lysdal.
Over the past few years, the ocean freight industry has seen an influx of systems, apps, platforms, and companies that provide different solutions to different issues. As the industry moves forward, Mr Lysdal foresees development in more comprehensive and complete solutions instead of solutions to localized and specific parts of the whole picture.
“By themselves, some of these solutions may appear a little gimmicky because they may only solve one small part of the puzzle. But these are completely good and valid ideas that offer better answers than the options that are currently available,” says Mr Lysdal.
“Within the next few years and hopefully even this year, we should start to see more of these being integrated into more comprehensive solutions and hopefully gain more traction.”