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FitchRatings Maintains Negative 2020 Outlook on Shipping

Logistic News - Published on Thu, 05 Dec 2019

Image Source: Fitch Ratings
Fitch maintains a negative sector outlook for global shipping because of the forecast slowdown of global economic growth and a balance of risks skewed to the downside. All shipping segments have been demonstrating more prudent capacity growth in recent years, which supports better supply/demand balance, but a longer record of capacity management is needed to strengthen the sector’s resilience. While upside is possible if the trade tensions between the US and China ease, the downside risks, including expected slower GDP growth in China, soft trade growth and Brexit uncertainty, continue to weigh on demand. The sector will also need to cope with a cost rise related to the compliance with a new regulation capping sulphur content in marine fuel (IMO 2020).

Angelina Valavina, Senior Director said “Demand-side risks remain skewed to the downside, in our view, and may outweigh the benefits of tightening supply growth. Slowing global economic growth, trade tensions and geopolitical risks establish a background for more subdued demand sentiment. The adaptability to the new sulphur regulation could also be a financial challenge.”

The implementation of the International Maritime Organisation 2020 regulation from 1 January 2020 is likely to lead to higher operating costs and/or capex for shipping companies.

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Posted By : Arun Huidrom on Thu, 05 Dec 2019
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