Between the global trade war and unprecedented shifts in supply and demand, 2018 was a wild year for the US shipping industry. Such a volatile global shipping market begs the question: “What will 2019 bring?”
A Bittersweet Outlook Overall for 2019 Shipping Companies
A quick glance shows a promising outlook for the shipping industry next year.
The surge in the industry’s growth that began in 2017 is expected to continue at the even pace of about 5% in 2019 – the same rate of growth the previous two years.
This is mostly due to the continued rise in demand within the dry bulk and container shipping segments. However, a closer look at other shipping segments shows a bittersweet outlook for the new year.
Low charter rates, oversupply, and tariffs from the escalating global trade war are expected to pose a serious threat to US shipping in the months to come.
Dry Bulk Shipping
Demand from the dry bulk shipping segment is expected to continue growing, albeit at the sluggish pace at 1%.
All in all, this is a positive takeaway that’s mostly due to a higher demand than supply for dry goods, resulting in healthy charter rates.
However, economists predict that the global trade war imposed by the US targeting a wide range of imports including steel and aluminum are expected to negatively impact the dry bulk industry by throwing off the positive balance of international supply and demand, and resulting in wildly fluctuating charter rates in 2019.
Economists predict a gloomy horizon for the tanker shipping business in 2019.
Tensions between the US, China and Mexico over multiplying trade tariffs are resulting in oversupply, and under-demand. While it’s possible that the market will eventually adjust to this new balance, increasing retaliatory tariffs from foreign nations are predicted to keep charter rates lower than average for tanker shipping companies nationwide.
The container shipping segment is expected to keep sailing along at a steady pace in 2019. No significant growth or losses are expected from this segment compared to the previous two years, as supply and demand continue to plateau.
Even though global demand for container shipping has risen sharply over the last 12 months, so has supply. This oversupply cancels out any chance of rising demand resulting in more desirable freight rates for container shipping businesses.
Preparing for Stormy Seas Ahead
While 2019 shows more uncertainty for the US shipping industry than it’s experienced in the past few years, shipping companies are not strangers an economy in a constant state of flux.
They know that preparing for the unexpected with a proper source of capital is vital to ensuring their cash flow stays flowing smoothly, no matter how violent the storm may be.
If you’re undecided as to how you plan on preparing for the unexpected, and protecting your shipping company from the tariff turmoil that’s sure to come, National’s specialized Business Growth Advisors have all the industry knowledge and financing experience to help.
Simply call (877) 482-3008 for a free consultation, or fill out our simple 1-minute application online to get the shipping business loan or line of credit you need in as little as 24 hours!