According to IHS Markit, the shipping industry is expected to make a comeback in 2020 after experiencing ups and downs in the past decade. With the new IMO regulation – implemented to curb sulfur emissions – scrubber retrofits and removals of older fleets that have high a compliance cost are expected to lead to fleet tightening, which will help increase freight rates and boost orders across numerous sectors.
As of 1 January 2020, approximately 2000 vessels, or less than 10% of the global fleet capacity, are equipped with scrubbers.
“Scrubber adoption started slow last year and scrubber retrofitting also has been delayed due to technical difficulties and lack of key parts available in yards,” said Dalibor Gogic, Principal Analyst at IHS Markit. “However, scrubber adoption is expected to continue and a second wave of installations is expected this year.”
IHS Markit expects more than 3500 units to be equipped with scrubbers by January 2021, which includes both the number of new orders expected to be delivered and the number of vessels expected to be retrofitted with scrubber technology. There also seems to be some potential for fleet removals.
Dry freight market to stabilise in 2020
IHS Markit expects the dry bulk market is on the long-term recovery cycle, primarily driven by supply normalisation. The dry bulk fleet is expected to grow 3% in 2020, compared to 3.8 %in 2019.
Considering the fleet is currently expected to have a scrubber retrofitted, fleet supply contractions on an annualised level are expected to continue with 1 - 2% of the dry bulk fleet offline in 2020.
Iron ore trade looks promising with Brazil set to produce more iron ore in 2020 after the tragic dam accident last year. Coal is an uncertain area where political decisions on environmental issues will determine the demand. IHS Markit expects coal trade to grow about 1% in 2020 with strong India and ASEAN demand despite structural decline in European coal demand.
Read the article online at: https://www.drybulkmagazine.com/shipping/24012020/shipping-market-to-strengthen-in-2020/