The ports and maritime sector has been changing rapidly in the last years and it is not easy to follow the trends in the market. What was valid in the past probably it is not valid anymore in 2023. Things were linear in the pre-Covid period, but the Covid brought a paradigm shift with a recovery period characterised by high volumes and profits in the sector. However, the party seems to be finished and future that is uncertain.
In order to understand the new trends in the market, our team has analysed the news in some of the main maritime media and the strength of each trend. As a result, six main trends have been identified although not all of them had the same relevance in the media. Some of these trends such as making shipping more environmentally friendly, the digitalization or the green hydrogen are coming from the past but others such as the decrease in traffic, the decrease in profits of liners or the reduction of the M&A activity are new to 2023.
Of these, the concerns about the decline in maritime traffic seem to be the ones that get more media attention, but the news about efficiency is still relevant. A brief description of each of these trends is provided below.
Ports and maritime transaction activity declines
During the last years, the maritime industry has witnessed a continuous process of consolidation and restructuring of relationships that included processes of horizontal consolidation, through mergers and acquisitions, and processes of vertical integration, through carriers' investment in terminal operations and other logistics services. This implied an increasing number of M&As in the sector reaching a record of activity in 2022.
This was generally accompanied of high expectations of sellers. However, based on the available data, things seem to have changed in 2023 (data estimated), with a much lower volume of transactions.
This could be partially due to the uncertainty of the global economic context, the fall in profits discouraging operations or the high prices requested by sellers.
It seems that many investors are just waiting to see how the market may evolve. Nevertheless, even in this situation, some maritime conglomerates have continued expanding horizontally trying to cover all the supply chain.
Source: Inframation. 2023 estimations
Decrease in maritime traffic accompanied by port decongestion
The year 2022 was also charaterized for being a maximum in the maritime traffic in most of the largest ports in the world. This increased the level of demurrages and port congestion but also the revenues of operators. However, since the summer of 2022, most of the largest ports are decreasing traffic, due to the current uncertainty in global trade due to the rising cost of living caused by inflation and the increased risk of a global recession or the political tensions. It seems that the last month the situation stabilized but going back to previous levels seems difficult.
Decrease in shipping line rates and profits
In parallel with the situation in ports, the imbalance between offer and demand created in the COVID years led to higher shipping rates and help liners to achieve a record of profitability in the last two years.
Nevertheless, since the summer of 2022, rates have plummeted and are approaching preCovid levels affecting the profits of the shipping companies at the end of 2022 and beginning of 2023.
It is uncertain what will be the future levels of the rates but the lower demand, increased fleet and restructuring of the shipping alliances could help to bring even more down prices.
In line with the previous, the financial results have been declining since the summer of 2022 until the first quarter of 2023.
Source: John D. McCown
Development of a green hydrogen logistics chain
The need for new energy sources is helping to make green hydrogen a hot topic in the ports and maritime sector. There is a lot of interest from port authorities, operators, or users to be at the front on its implementation of the maritime sector. Ports and operators dream of becoming production and bunkering centres doing a reconfiguration of the sector and shipping lines expect to be more efficient and environmentally friendly.
Projects in ports are aimed at developing hydrogen transport hubs, such as the ports of Vienna and Rotterdam, or becoming producers of green hydrogen and suppliers for bunkering purposes, such as the ports of Valencia and Stockholm.
Source: Study on hydrogen in port and industrial coastal areas. EU
Making shipping more environmentally friendly
Despite the efforts to make the shipping sector more friendly, CO2 emissions from the global merchant fleet have continued to increase in the last years, except for 2020 due to Covid. However, the sector continues to have a strong focus on more investment in new ship technologies to achieve energy efficiency and an accelerated shift to low-carbon alternative fuels are foreseen to reduce the carbon footprint of shipping.
Some of these technologies or investments include the use of batteries to produce fully electric or hybrid vessels, exhaust gas cleaning systems, the use of new fuel technologies or the development of more energy-efficient vessels. These industry efforts go hand in hand with new IMO regulations that will force ship owners and operators to adapt to the new EEXI and IIC requirements.
Digitalization as an efficiency driver
Digitalization and automation play a key role in the efficiency of logistics processes and the reduction of greenhouse gas emissions in the ports and maritime sector. In 2023, the digitalization will focus on areas such as artificial intelligence, use of drones, digital twins and data analytics.
About the authors
Rubén Naveiro
Holds a MSc in Industrial Engineering, B.Sc. Industrial Engineer and is Principal at ALG.
