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COULD IMO 2020 TRIGGER CONTAINER CARRIER CONSOLIDATION? DREWRY ASKS

Monday, April 1, 2019 

The latest container shipping industry analysis from Drewry Shipping Consultants suggests that the IMO 2020 global fuel sulphur cap could trigger more mergers and acquisitions in the sector, or even force a major carrier into bankruptcy.

Despite a small revival in the second half of 2018, Drewry says that the industry still hasn’t fully recovered from the global financial crash and the devastating losses incurred thereafter. It has identified that many container shipping operators still reside in the so-called “distress zone”, and are financially vulnerable, so could be seriously affected by the extra costs imposed by IMO 2020. As the deadline for the fuel sulphur mandate draws nearer carriers are inevitably getting jittery about its overall impact. Are they in a position to deal with myriad of extra associated costs associated with more expensive fuels, scrubber installation and extended bunker credit?

Drewry suggests that it could turn out that the IMO will inadvertently push industry consolidation, through mergers and acquisitions, closer to where it needs to be in order to achieve sustainable profitability.

Only one trade in Drewry's sample, the relatively small Europe-East Coast South America southbound trade resides in the 'highly concentrated' bandwidth. Most of the key East-West trades fall into the 'competitive' description.

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