The Economics of Shipping
A lot of variables factor into the performance of global shipping markets, the most obvious of which is the supply of international trade. Imports and exports are often transported across huge bodies of water in tankers, bulk carriers and containers; these are massive and sometimes complex ships that need to be financed, built, staffed, repaired and maintained, contracted, regulated, protected, insured, inspected and partnered with port authorities.
Shipping companies and the governments to which they are so often closely tied need a lot of investment to construct and liquid cash to upkeep. Ships are financed like any other large-scale construct, which means capital markets are a critical component as well. Investors shied away from shipping in 2015, putting pressure on shipbuilders and transport companies.
Rising nationalist and anti-free trade sentiment in the United State shoulders some of the blame. With an election year in 2016, the prospect of rising tariffs on imports could trigger a shock to shipping traffic. World trade stalled in a significant way during 2015, which meant international shipping markets stalled with it. Vessel rates started to slow significantly in late 2014. The downward movement refused to abate throughout the year, punctuated by China’s meltdown in July and August 2015.
Adding pressure to the cost front, the International Chamber of Shipping (ICS) pledged its support to lower CO2 emissions in late 2015 during the United Nations Climate Change Conference. The ICS indicated it would pressure the International Maritime Organization (IMO) to develop new technologies and reduce «CO2 per tonne-km 50% by 2050.» The ICS admitted its members would have to «digest the full implications of the final UNFCCC agreement» because of the changing economics of global shipping.