In its recently published survey of clients and others on what was seen as “the way ahead” for transport, legal firm Norton Rose Fulbright asked:
What do you believe will happen over the next five years in the shipping industry?
A recurring concern for the shipping industry was the ability to secure finance and, looking ahead, only 22% believed that the availability of funds would increase, while 41% were worried that funding would become harder to obtain. Norton Rose Fulbright observed that this was “a considerably higher proportion than respondents from the aviation, rail or logistics industries”. Respondents from the shipping industry were also expecting lenders to take a tougher stance on problem loans, with 54% anticipating that enforcement actions would increase between now and 2022.
The firm asked:
What will be the primary source of funding for the shipping industry over the next two years?
Bank debt was expected to remain the industry’s primary source of funding, notwithstanding the comments above, according to 23% of respondents. This was followed by private equity and shareholders, selected by 15% and 14% respectively.
While overcapacity continued to weigh heavily on the shipping industry, respondents are less concerned about an increase in competition – 51% expected competition to increase over the next five years, compared with 74% of respondents from the aviation industry, 71% from the rail industry and 59% 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% forecast that fuel costs would rise over the next five years, 61% predicted that freight costs and fares would also increase.
Norton Rose Fulbright asked:
What is the greatest challenge to the operational efficiency of the shipping industry?
While 35% believed that overcapacity posed the greatest challenge to the operational efficiency of the shipping industry, 14% pointed to a lack of suitably qualified people and 13% to emission controls.
What do you see as the greatest threat to the shipping industry over the next five years?
Global political uncertainty, a global recession, and protectionism were seen as posing the greatest threats to the shipping industry over the next five years, according to 28%, 25%, and 22% 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 was seen as the most helpful form of government support for the industry, by 35%. A further 18% favoured deregulation, followed by 12% who favoured fiscal incentives and a further 12% who called for the removal of barriers to foreign investment.
When asked which regulation had the greatest impact on the shipping industry over the past decade, 43% pointed to increased environmental regulation, followed by 18% who highlighted the impact of trade and financial sanctions, and 12% who pointed to fragmented global regulation.
*The survey was sent to people engaged in the aviation, logistics, rail and shipping industries and distributed Norton Rose Fulbright contacts. The 196 respondents included owners and operators, financial institutions, professional advisers, manufacturers and members of government organisations and transport authorities from around the world.
The survey was open for responses during April 2017. http://transportsurvey.nortonrosefulbright.online/publications/shipping