The shipping industry is looking to investment in new technology and to develop the benefits of closer integration with other forms of transport, and is preparing for the changes that the widespread adoption of big data will deliver for maritime businesses.
When asked to consider the optimal investment opportunity currently for the shipping industry, 25 percent of respondents favour investment in new technology, up from 14 percent in 2016. Consolidation remains a continuing theme for the shipping industry - 38 percent believe a merger or acquisition or the formation of a joint venture, pool or alliance would be the best investment for the industry today, although this is down from 47 percent in 2016.
Aside from fuel efficient and low carbon technology, what form of technology will be the most significant driver of change in the shipping industry over the next five years?
While it is generally accepted throughout the industry that the development of fuel efficient and low carbon technology will bring about wholesale changes to the industry by assisting operators to comply with increasingly stringent environmental regulation, big data and predictive analytics are also expected to be a significant driver of change over the next five years. The ability to anticipate repairs and maintenance and better understand and to forecast consumer behaviour through big data is expected to act as the biggest catalyst for change, as selected by 46 percent, while 19 percent believe that software supporting Transport as a Service, which allows for the development of tailored end-to-end supply chains, has the greatest potential to transform the industry.
What form of infrastructure investment would benefit the shipping industry the most over the next five years?
Respondents return to the theme of Transport as a Service when asked what form of infrastructure investment would benefit shipping most over the next five years. 43 percent believe that integration with other forms of transport services to deliver bespoke supply chains would be most helpful to the industry. A further 28 percent favour the development of new port capacity in emerging markets, and 15 percent the development of intelligent ports, where various port infrastructure is connected by the Internet of Things.
Which three countries offer the best investment opportunities for shipping over the next two to five years?
In common with the aviation industry, respondents from the shipping industry view China, India and the US as the markets offering the most attractive investment opportunities over the next two to five years, by 18 percent, 12 percent and 11 percent respectively. Asia Pacific is the region thought to offer the best investment opportunities overall, by 45 percent.
Confidence in the shipping industry appears to be improving. This year, 37 percent report that current market conditions are positive for the shipping industry, compared with 15 percent in 2016, 33 percent in 2015, and 69 percent in 2014.
While sentiment has fluctuated over the past four years, the problem of overcapacity has been an enduring theme - 65 percent of the 63 percent who do not consider current conditions to be positive blame overcapacity. In fact, 35 percent of all respondents from the shipping industry believe that supply and demand imbalances pose the greatest challenge to the operational efficiency of the shipping industry, although this is down from 47 percent in 2016.
Of the 37 percent who believe current conditions are positive, 36 percent cite improved economic conditions, while 19 percent report that overcapacity issues have been largely resolved. Continued lower oil prices are also assisting the industry, according to 16 percent.
Another recurring concern for the shipping industry is the ability to secure finance. Looking ahead to the next five years, just 22 percent believe that the availability of funds will increase, while 41 percent fear that funding will become more unobtainable, a considerably higher proportion than respondents from the aviation, rail or logistics industries. In addition, respondents from the shipping industry are expecting lenders to take a tougher stance on problem loans, with 54 percent anticipating that enforcement actions will increase between now and 2022.
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While funding is forecast to become more difficult to access, bank debt is expected to remain the industry’s primary source of funding, according to 23 percent, followed by private equity and shareholders, selected by 15 percent and 14 percent respectively. One respondent pointed to private debt and direct lending as an alternative source of funding for shipowners.
While overcapacity continues to weigh heavily on the shipping industry, respondents are less concerned about an increase in competition - 51 percent expect competition to increase over the next five years, compared with 74 percent of respondents from the aviation industry, 71 percent from the rail industry and 59 percent from the logistics industry, indicating that respondents believe that some headway will have been made in resolving the problem of overcapacity between now and 2022. While 57 percent forecast that fuel costs will rise over the next five years, 61 percent predict that freight costs and fares will also increase.
While 35 percent believe that overcapacity poses the greatest challenge to the operational efficiency of the shipping industry, 14 percent point to a lack of suitably qualified people and 13 percent to emission controls.
Global political uncertainty, a global recession, and protectionism pose the greatest threats to the shipping industry over the next five years, according to 28 percent, 25 percent, and 22 percent respectively.
Aside from infrastructure investment, which of the following forms of government support would help the shipping industry most?
Against a backdrop of political and economic uncertainty, greater transparency as to the introduction of proposed regulation and in the application and enforcement of new regulation is seen as the most helpful form of government support for the industry, by 35 percent. A further 18 percent would favour deregulation, followed by 12 percent who favour fiscal incentives and a further 12 percent who call for the removal of barriers to foreign investment.
When asked which regulation has had the greatest impact on the shipping industry over the past decade, 43 percent pointed to increased environmental regulation, followed by 18 percent who highlight the impact of trade and financial sanctions, and 12 percent who point to fragmented global regulation.