Norton Rose Fulbright: Shipping, the way ahead

New technology, joint ventures, mergers & acquisitions, and the development of new geographical & sectoral markets were currently seen by the industry as the optimal investment opportunities for the shipping sector, according to an analysis of the way ahead for transport in 2017, published by legal firm Norton Rose Fulbright. A quarter of respondents favoured investment in new technology, up from 14% in 2016. Consolidation remained a continuing theme for the shipping industry – 38% believed a merger/acquisition or a joint venture, pool or alliance would be the best investment for the industry today, although this was down from 47% in 2016.

When asked what form of technology would be the most significant driver of change over the next five years (excluding fuel efficient and low carbon technology) the ability to anticipate repairs and maintenance and better understand and to forecast consumer behaviour through big data was expected by 46% to act as the biggest catalyst for change, while 19% believed that software supporting Transport as a Service, which allows for the development of tailored end-to-end supply chains, had the greatest potential to transform the industry. Distributed ledger technology (e.g. blockchain solutions for the live monitoring of cargo) was selected by 15% of respondents. When asked what form of infrastructure investment would most benefit the shipping industry over the next five years, 43% believed that integration with other forms of transport services, thus delivering bespoke supply chains, would be most helpful to the industry. A further 28% favoured the development of new port capacity in emerging markets, while for 15% of respondents the most significant driver was the development of intelligent ports, where various port infrastructures could be connected by the Internet of Things.

Overall, Norton Rose Fulbright found that industry confidence appeared to be improving. This year 37% of respondents reported that current market conditions were positive for the shipping industry, up from just 15% in 2016, 33% in 2015 and 69% in 2014. The firm noted that, while sentiment had fluctuated over the past four years, the problem of overcapacity had been an enduring theme – nearly two-thirds of the “negative” 63% blamed overcapacity. Just over a third of all respondents from the shipping industry believed that supply and demand imbalances posed the greatest challenge to the operational efficiency of the shipping industry, although this was down from 47% in 2016. Of the “positive” 37%, just over two-thirds cited improved economic conditions, while a fifth reported that overcapacity issues had been largely resolved. Continued lower oil prices were also assisting the industry, according to a significant minority of the positive group.

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.