Global shipping trends: What to expect in 2020
Now that the fireworks are over and New Year’s resolutions are set, it’s time to prepare for global shipping in 2020. And that means looking at ongoing trends and changing regulations. One thing’s for sure, freight forwarding never has a dull moment.
Recapping 2019’s top global shipping disruptors
Before we jump into expectations for this year, let’s set the stage by looking at some of the top events in 2019 that may have affected global shipping strategies around the world.
Geopolitical uncertainties
From the ongoing Brexit discussion to the China-U.S. trade war and the trade conflict between Japan and Korea, these and other disruptions caused serious challenges to the transportation industry.
Preparation for International Maritime Organization (IMO) 2020
While the latest revisions didn’t go into effect until January 1, 2020, preparation for the changing IMO requirements was well underway in 2019. The requirement to reduce sulphur oxide emissions from 3.5% to 0.5% was a drastic change that will likely continue to affect shipping costs and capacity availability.
Ecommerce expectations
With the growth of ecommerce and high-tech products flooding our markets, air freight is a go-to mode of transportation for many shippers—any time of year.
To best understand how these and other mode-specific changes will affect your 2020 shipping year, let’s break them down by service.
Ocean service in 2020
In the past, ocean shipping followed the basic law of supply and demand. When demand increased, rates went up. When demand decreased, rates dropped. This often occurred regardless of carrier profitability. But that is changing, which could reshape expectations for 2020.
Carriers controlling capacity
Today’s ocean carriers are quick to withdraw capacity when demand changes. By adjusting the amount of equipment available, ocean carriers are better able to ensure demand remains tight enough to protect their profits. This is a successful technique because there are fewer ocean carriers than in the past, allowing for a quicker reaction when supply and demand shifts.
Increasing carrier costs
While ocean carriers can control capacity to help ensure rates remain compensatory, we can still expect some level of imbalance due to the IMO 2020 mandate, which increases carrier costs.
Driver and drayage capacity shortages
California Assembly Bill 5 (AB-5) went in effect on January 1, 2020, which limits the use of classifying workers as independent contractors rather than employees by companies in the state. This may affect the availability of the number of dray carriers in the busiest ports. This in turn can drive drayage costs up.
To read the full post, visit Transportfolio.
President @ Republic Supply Chain | Ex-APL
4yGood overview. In my view, some more headroom is there for the ongoing disruptive phase, before it finally shapes up as few ( less than 5) emerging as clear global players and others as niche players. Both type of players wud hv had their game clearly cut out eventually - most probably in 2020. In my opinion niche players will witness more stability as they are finally emerging from their so called 'identity' crisis to remain more agile, flexible and customer centric. They will also remain better immune/ insulated from the geo -political crisis gripping the world trade every now n then !. Rate environ ?. More or less like how it was in 2019. Smart forwarders can efficiently manage it, with a better hold / view on the unpredictabilities n its cyclicalities in each geo space !!
Man of Faith. Freight Forwarding Career Maker.
4yThanks for sharing, Mike. Happy New Year to you and the great folks at CHR
Partner & Managing Director
4yHappy New Year Mike!!