Martin Stopford, the well know shipping analyst and Honorary President of Clarksons, suggested that when you combine certain factors and assume the role of the captain of a sailing ship, a sense of an impending storm on the horizon may start to emerge. The exact location and timing may not be precisely known, but perhaps now is the opportune moment to commence preparations for your vessel.
Martin Stopford during London Shipping Week speaking at the International Shipowning and Shipmanagement Summit (ISSS) warned there were factors pointing towards a cyclical downturn and he highlights that the clouds are thickening above the maritime industry, with the storm approaching. Further, he noted that there are factors on the horizon indicating an economic downturn.
“If you were the captain of a sailing ship, you would be busy preparing your vessel for challenging seas ahead” , he said at the electronic event held at the beginning of London International Shipping Week.
Stopford drew a comparison with the Yom Kippur War, approaching its 50th anniversary on October 6, which was a milestone for shipping, causing the major oil crisis of 1973. The Yom Kippur War, also known as the Ramadan War, the October War, the 1973 Arab–Israeli War, or the Fourth Arab–Israeli War, was an armed conflict fought from October 6 to 25, 1973, between Israel and a coalition of Arab states led by Egypt and Syria. The Yom Kippur War had both immediate and longer-term effects on the maritime industry, including disruptions to shipping routes, increased insurance costs, security concerns, and diplomatic efforts to reopen key waterways. The war underscored the importance of geopolitical stability in maritime trade and had a lasting impact on shipping considerations in the region.While the Suez Canal was reopened, the Yom Kippur War highlighted the vulnerability of maritime trade routes in the region to geopolitical conflicts. This led to continued concerns about the security and stability of these routes, influencing decisions about diversifying shipping routes and exploring alternative transportation options.
Stopford emphasized that the impact of this substantial increase in energy costs on the global and maritime economy was not taken seriously by anyone, during a period similar to the one where many things have accumulated is believed to be approached. These many things, the factors that Stopford highlights are the following:
- the pandemic and the war in Ukraine, which has affected grain trade. Interest rates have continued to rise, increasing transportation costs by up to 60%;
- China’s economic growth slowdown that needs to be addressed; and
- the changing geopolitical situation in Asia and the Middle East.
- Thirty banks have signed the “Poseidon Principles,” an initiative linking financing to measures to improve a vessel’s environmental performance, are expected to meet in September 2023 to agree on stricter lending targets that will ultimately lead to a reduction in maritime financing.
How do you start preparing your ship? According to Stopford:
- Digitalization may be a way, according to Stopford that shipowners improve their chances of facing these challenges by fully embracing digitalization. He emphasized that digital systems will make shipping companies more resilient in the coming years and better equipped to handle market surprises.
- Closer relationship between shipowners and cargo owners. Forging bonds with the cargo side is absolutely fundamental.
- The choice of ship management companies, for cost-cutting.
- Slow down ship orders to secure better freight rates.