After IMO 2020 upended global shipping in January, the coronavirus outbreak and OPEC+ bring high degrees of uncertainty in the market
At the start of the new decade, the overriding issue dominating shipping markets was the International Maritime Organisation’s new regulation mandating the reduction of sulfur content in marine fuels (IMO 2020). Just a few months in, that already feels like ancient history as the COVID-19 pandemic has cut a swathe through the global economy after a succession of countries have entered into lockdown.
It’s an old shipping adage that times of international crisis generally help to stimulate shipping markets, as sudden shifts in trading patterns and more complex logistical considerations can have a positive effect on freight rates. The overall impact of the pandemic is yet to become clear. So far, freight markets have shown fluctuating fortunes.
The demand for floating storage caused by tumbling oil prices has been a positive stimulus for dirty tanker rates, clean tankers appear at a crossroads. Dry bulk, container and LNG freight all face being hit on the demand side.
Clearly the overall slowdown in the economy as a result of the widespread shutdown of activity will have ramifications for months and years to come. Shipping often finds itself on the front line of shocks to the global economy – the 2008 financial crash is still an abiding memory for many market participants. Freight rate volatility will remain a feature of these markets. S&P Global Platts continues to provide participants with the price transparency and information they need to navigate the challenges to come.
— Peter Norfolk, Global Director of Freight