Container shipping dynamics may shift

Carriers can using emerging technologies to cut costs, find new revenue streams.    Analysts at Danish Ship Finance (DSF) say that “emerging digital business models” may begin to change dynamics in the container shipping industry in coming years.
   The most recent edition of DSF’s twice-yearly Shipping Market Review, says, “The short- to medium-term outlook for the container industry will continue to be characterized by oversupply and contingent on the delivery schedule of the orderbook” for new ships.
    The outlook for 2018 improved in the first three months of the year as containership deliveries have been deferred, reducing the expected nominal fleet growth for this year from 8 percent to 6 percent, the Copenhagen-based lender says. Assuming economic growth of around 4 percent to 5 percent over the next several years, “the oversupply could begin to decline from 2019 onwards, providing that contracting stays relatively muted.” That could support higher freight rates and improve the outlook for tonnage providers.
   While “consolidation and network optimization have been the main themes in the container industry during the last couple of years,” DSF says this may change as carriers struggle “not to become low-cost providers of commoditized container services.”
   Carriers can use “digitalization” to both lower costs and find new revenue streams, it says, but adds “it is not only liner operators chasing these opportunities. We are also seeing players from outside the shipping industry from freight forwarders to digital players and startups, racing to obtain their share of these value creators.”
   It points to container tracking, empty container repositioning, document management, network design and dynamic pricing as examples of functions carriers are digitizing.
   “Digitalization is expected to create opportunities for further cost reductions, stronger customer relationships and eventually additional revenue streams,” it said.
   For example, if a carrier “decides to offer trade financing to all its customers, thereby leveraging on a strong capital market access, it may actually generate higher revenues per unit moved than its competitors.”
   “If the role of assets starts to diminish in terms of revenue generation, it might lead liner companies to pursue a more asset-light business model,” said DSF, but added “that does not change the fact that the industry still needs the ships.”
   With many shipowners suffering huge losses over the past decade, “few have the scale or financial resources to transition into a digital future,” the report says. “This may call for an updated business model, where the ships (and the data they generate) are offered as a service.”