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Shipping lines face new headwinds

Shipping lines face new headwinds


Copenhagen-based Maersk said 2019 will be subject to considerable uncertainties because of the risks of further restrictions on global trade. It added that a new regulation by the International Maritime Organization to cut sulphur emissions from ship stacks “will bring significant increases in fuel prices.”

Industry experts expect the IMO rule, which goes into effect at the beginning of next year, to boost ship fuel costs by about one-third.

Equities analyst David Kerstens of Jefferies LLC in a report last week trimmed the investment bank’s target for Maersk shares, in part based on the carrier’s wary outlook for the year. The firm expects Maersk to recover its US$2b in added fuel costs, but “irrational behaviour with price competition remains the key risk factor and could potentially trigger the fourth wave of sector consolidation and a shakeout among some of the smaller loss-making and financially distressed Asian carriers.”