Fitch Ratings 2021 Outlook: IMO Emissions Rules Could Affect Medium-Term Outlook for Global Shipping

Fitch Ratings has revised its global shipping sector outlook to stable, reflecting improving fundamentals for container shipping and dry bulk, albeit a relatively weak tanker segment. Prudent capacity management, particularly in container shipping, should enable operators to benefit from a partial rebound in demand across freight categories in 2021 based on our current expectations for a global economic recovery.

However, there could be higher-than-average intra-year volatility due to timing mismatches. Key downside risks include a slower economic recovery than forecast or further coronavirus-pandemic waves that lead to a collapse in demand comparable to that of 2Q20. Shipping demand could be pressured by a potential increase in trade protectionism during the recovery from the pandemic, and the outcome of a Brexit deal (or lack of).

Developments in emissions regulations by the International Maritime Organization (IMO) or EU could affect the medium-term outlook for sector cost structures and the earnings capacity of relevant shipping segments. Rating Outlook: Stable Stable rating outlooks dominate our global shipping portfolio. The companies are well placed at their current ratings following our rating actions in 2019. We expect similar performance in 2021 as we forecast freight rates to be fairly supportive and less volatile than in 2020, while tanker shipping is relatively more exposed, which should underpin shipping companies’ financial metrics.
Source: Fitch Ratings