CHRIS MORGAN:

IMO2020 with its sweeping, seismic new sulphur restrictions wasnt even slightly The biggest thing to happen to shipping last year.

There is something almost comforting in moving our collective glance back to the same issue that has been worrying credit managers since 2008: poor market rates in the box sector.

The container market has been a very difficult place to make money over the last few years and therefore an area of concern for bunker credit managers. Box rates ended the year very solidly and there were high premiums being added onto Asia-US and Asia-EU traffic, with a noticeable drop in newbuild orders to boot. Per FEU rates from China to the United States ended 2020 at 208% for West Coast and 110% higher for East Coast than in 2019, according to the Baltic Exchange. For those correctly-placed with the right tonnage on the right routes with the right traffic, the prevailing rates moving into January have looked very good.

Odd as this may sound, one of the reasons the box market has trended upwards in 2020 is because of robust demand for medical equipment and protective clothing from the Covid pandemic, from manufacturers in Asia to the US and EU/UK.

Ongoing uncertainty in the financial markets as banks look to deleverage shipping investments has raised the bar for capital lending and this coupled with the IMO2020 restrictions and lack of a consensus on vessel propulsion choices has softened newbuild numbers which has been the major issue dogging containers for the last decade or so. The bigger the global fleet, the more out of equilibrium the global fleets are in terms of supply vs demand. This has a direct effect on the levels of risk we as bunker companies are taking when we extend credit to the market for fuel purchasing.

As the world moves towards a Covid vaccine and we can begin to contemplate how life might look once this pandemic is over, we can also be thankful that the major shipping markets are in a better position than they were.

2020 has taught us to be careful what you wish for and that truth can often be stranger than fiction. Like a figurative chocolate box from a famous movie, we are looking forward to what surprises 2021 has in store,