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Regulatory uncertainty tops shipping’s risk list

The annual Outlook Forum poll reveals a divided industry view on the pace of change across the shipping sector

The greatest risk to shipping markets over the next five years is regulatory uncertainty, according to a Lloyd’s List poll ranking industry views on the critical issues likely to influence maritime markets next year and beyond

REGULATORY uncertainty, compliance cost and supply chain disruption have topped the list of industry concerns shaping business decisions, according to the annual Lloyd’s List Outlook Poll.

More than 45% of the respondents cited regulatory uncertainty as being the greatest risk to shipping businesses over the next five years, indicating a growing concern about the pace and uniformity of climate measures due to be imposed on the shipping sector.

When asked the same question for the 2020 edition of the Outlook Poll, 34% of respondents cited sanctions and regulatory risk as being their greatest concern, while 33% cited vessel oversupply.

This year’s survey saw concerns regarding oversupply as waning slightly, with 30% of respondents listing it at the top of their risk ranking, while coronavirus and access to finance trailed behind at 13% and 11.5%, respectively.

The poll questions, tabled by Lloyd’s List in advance of its annual Outlook Forum on November 30, asked Lloyd’s List readers to rank their views on the critical issues likely to influence maritime markets next year and beyond.

The results revealed a divided industry view on how quickly anticipated regulation requiring ships to decarbonise would emerge. While the majority of respondents believed that a carbon levy would be imposed on shipping by either 2025 or 2030, more than 22% did not expect to see a levy until after 2035 and over 10% indicated it would not happen at all.

The timeline of how quickly the current supply chain disruption would last looks equally extended, with 56% of respondents suggesting that the crisis would not end before 2023. More than 38% cited supply chain disruption as being the most significant macro factor affecting shipping markets over the next two years.

This year’s survey results also indicated a shifting attitude towards the urgency of efficiency retrofits and the payback generated by digital investments.

When asked in 2020 to rank the best investment opportunity for shipping, 36% opted for digitalisation, while 28% plumped for efficiency retrofits. Asked the same question this year and the priorities have switched, with 32% prioritising retrofits over just 28% voting for digitalisation.

The swing in responses suggests that as concerns have grown over the timeline of carbon regulation, the more immediate requirement to retro-fit existing vessels has increased, over and above the mid-term payback offered by some digital investments.

“Retrofitting is going to be by far the most important capital expenditure up until 2050,” said Citi's chairman of shipping and logistics business Michael Parker, who will join a panel of industry leaders to discuss the poll results on Tuesday.

According to Mr Parker, coronavirus has catalysed action this year, demanding a reassessment of priorities for many of the respondents to this year’s survey. He also suggests that the pace of change is accelerating across the industry and those not prepared to address issues such as decarbonisation will increasingly be at risk. 

“There’s no choice now… If you’re not a first-mover — or very close to being a first mover — you could get left behind and indeed left out of the future of this industry.”

 

The Outlook Forum is free to attend and you can register here.

This year’s panel will feature:

•            Monique Giese, global shipping lead, KPMG

•            Şadan Kaptanoglu, chief executive officer of Kaptanoglu Shipping and former president of BIMCO

•            Michael Parker, chairman, Global Shipping Logistics & Offshore, Citigroup

•            Chris Wiernicki, chairman, president and chief executive officer of the American Bureau of Shipping

•            Frank G Olsen, chief executive officer, Inchcape Shipping Services

 

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