Letter from the editor

EDITOR’S LETTER

Speaking to leaders in the industry, as I often do, I have been quite surprised going into 2021 at the level of optimism about business conditions for the year. Perhaps it reflects a widespread relief at seeing the back of 2020 but there have been several comments about how good the underlying conditions appear to be right now.

Perhaps it is also a sign of relief as we begin to see companies issuing their financial results for 2020, which so far have been remarkably good for most players in the dangerous goods supply chain. Product is still moving and, with restrictions relating to the Covid-19 pandemic still in place, operators are in a position of sweating their assets to make sure their customers keep supplied. With uncertainty has come stockbuilding, which has certainly been good news for bulk liquids terminals but also for tank container operators, though Stolt-Nielsen’s latest set of results seem to indicate that the use of tanks for temporary storage is now beginning to ease.

That positive picture is also seen across the shipping industry, not least in the container sector, where the efforts made over the course of 2020 by the major lines to reduce capacity have led to a position of very tight space and rocketing ocean freight rates. That is good for them but less good for shippers and, if the pricing environment continues, it may contribute to the trend for re-shoring supplies that was spotted in the early months of the pandemic.

In the tanker trades, revenues have been supported by tight supply. In chemical tankers, for example, there has been little newbuilding activity and few new contracts placed over the past couple of years. This is surprising at a time of firm freight rates but reflects the uncertainty felt in the maritime industry about the environmental regulations that operators will have to meet in the future. After all, a new ship ordered today will be expected to trade for at least 20 years – longer in the specialised tanker trades such as chemicals and LPG – and will therefore need to meet future emissions and efficiency standards that are not clear. While the necessary technologies are out there, many are not yet at the scale that is needed. Nonetheless, progress is being made in several areas, notably the use of ammonia, hydrogen and electricity for ship propulsion, as we report in this issue.

But there is a suspicion that those executives expressing confidence in their optimism about the market for the rest of the years are doing so with their fingers crossed behind their backs. We are not yet close to beating off the Covid-19 pandemic, people are still dying in their thousands and lockdowns and other restrictions are far from over. While the arrival of vaccines offers a light at the end of the viral tunnel, their performance has not been fully proven in the real world and we do not yet know how they will cope with mutating strains.

The logistics industry adapted remarkably rapidly to the uncertainties that the pandemic delivered in the second quarter of 2020; they – and the rest of us – have got used to new ways of working and new ways of communicating. It seems to me that what we have learned in 2020 will still be relevant for the rest of this year, if not for longer.