It’s hard to consider port challenges without first understanding factors influencing container carriers — our customers and often our shareholders. By all accounts, 2018 was a good year in terms of global container volume growth at around 4.6 percent. And we started to see carriers begin to turn in modest black figures by the third quarter. Hopefully this positive trend can continue into 2019. In the port sector we, too, had a good year in terms of delivering a stable port product throughout the US and Canada at around 4 percent growth.
Service contract negotiations between carriers and BCOs will be of paramount importance this year as the industry prepares for January 2020 and the IMO initiated 0.5 percent low-sulfur fuel requirement. I read recently that this change is the biggest event since the migration away from coal as a fuel. I’ve heard all sorts of numbers on the annual impact, but it seems unlikely to be less than $15 billion for our industry. Scrubbers and LNG will help somewhat, but the vast majority of carriers will adjust to the new fuel standard and seek to justifiably recover with a floating BAF.
Global logistics and trade patterns are unlikely to change as a result of trade disputes. There is such inertia I find it hard to see anything other than an eventual soft landing in time.
With operations in the US and Canada, safety is the primary driver of the Ceres and Yusen terminal business. Maintaining an environment where everyone who comes to work can go home safely is all that really matters. Productivity remains a challenge in some ports; turning around larger vessels in a shorter window puts stress on the infrastructure. We need to find ways to adjust or processes and capabilities to deal with this new reality.