I'll be frank: I expect a relatively flat market for 2015 compared to 2014. Sorry folks.
However, there are regional variations and differences between industries that will offer a silver lining, and longer term things are looking more up-beat.
Great variations between geographies
- The NAFTA area is performing well and we expect this to continue. We see significant production capacity being developed in the USA and particularly in Mexico, across industries. Over the past year we have strengthened our liner service ex Asia and Europe to North America to support customer growth in these regions, among other adding a direct call to Galveston from Asia.
- Growth in South America has been patchy as of late, but successful reforms in Brazil should contribute to driving a recovery with positive implications for the entire region. This year WWL added a new monthly port call to San Antonio, Chile creating a regular service from Europe and North America to South America’s West Coast.
- The European economy is not where it should be. There are some upsides, but it is a sluggish market and we do not expect major recovery in imports in 2015. European exports on the other hand are quite strong, especially ex Germany. Despite this outlook, and driven by demand from the auto industry, we have strengthened our service from Asia to Europe via the Mediterranean. With this we also serve North Africa, another region with its share of challenges but also a significant potential.
- We expect Intra-Asian trade to pick up, especially on the back of infrastructure projects and manufacturing capacity additions in South East Asia. This will drive demand for machinery, rail cars, construction equipment and power generation units.
- Australia has been slow for quite a while, and while we expect it to stabilize next year we do not expect much growth. The mining boom is not coming back with a vengeance in 2015.
Industries – a mixed bag
Even if investments are not soaring, the need for replacement as well as new production capacity across the world give a stable outlook for machinery and machine tools. Infrastructure projects will also remain at decent levels and will translate into good volumes of rail industry and power industry products.
Mining looks less positive. Since the mining boom peak in 2012 volumes have dropped significantly, and I do not expect any major recovery in 2015.
The aviation industry has a more positive outlook, on the back of strong demand for new aircraft, in particular in Asia. The major manufacturers are expected to grow their volumes as well as their supplier base.
Oil prices are low and the outlook is not good for that segment. My favorite oil Analyst, Torbjørn Kjus at DnB, expects the price to drop even further in 2015 from current levels.
The lackluster and unpredictable market has made industry, especially oil & gas, more cost conscious, and more particular in their choice of suppliers. Gone is “money is no object”. Everyone requires more cost efficient logistics solutions to protect their margins. At the same time, the need for consistent quality and frequency in delivery remains paramount.
A changing world for the Shipping industry
The 2015 introduction of the 0,1 % sulphur limit in ECA’s is an unprecedented challenge for shipping, both operationally and financially. The only readily available solution is to shift to MGO, a fuel that costs 50% more than HFO. This will increase rates and create an even bigger incentive for shippers to try new solutions.
Over the last three years multipurpose companies have been in a difficult financial situation, with lower volumes coupled with a vast over-supply of tonnage driving down rates. We believe this struggle will continue given the current imbalances, leading to more mergers, acquisitions and joint ventures. At the same time, we have seen RoRo carriers attracting a larger share of breakbulk cargo, as customers look for carriers that can bundle products to keep down costs and who offer reliable and frequent service.