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If you were to ask a European chief executive for an opinion on the outlook for shipping in 2023 and beyond, you would quickly get to the topics of geopolitical risk and a slowing global economy.
Vladimir Putin’s invasion of Ukraine has led to the biggest land war in Europe since 1945, the biggest commodity shock since the 1970s and the most far-reaching sanctions regime since the 1930s.
In our annual Lloyd’s List Outlook poll, the cost of decarbonisation (35%) unsurprisingly topped the list of concerns that are most likely to keep maritime executives awake at night but with the complexity and disruption already seen in the wake of the Russian oil price cap coming into effect, the cost of compliance (24%) was not far behind.
A rapid reshaping of the global energy system has knocked macroeconomic stability and a global recession for the majority of 2023 now looks inevitable. In our poll, a global recession (49%) was seen as the biggest risk to shipping businesses in the next two years.
China looms large in this equation of geopolitical and economic risk. President Xi himself warned of “dangerous storms” ahead at the five-year party congress in October, where the recently dialled-up nationalist rhetoric — especially over Taiwan — has left many concerned that he has moved from logical to ideological at an alarming pace.
But as Maersk’s outgoing chief executive Søren Skou recently told the Lloyd’s List podcast when asked for a view on looming risks, the longer-term outlook leaves room for optimism. “As we depend on China, China depends on us,” was how he described it.
China’s economy will enter 2023 enfeebled by the impact of its zero-Covid strategy and a significant property crisis — but that only means that the export part of the Chinese economy will have to play a bigger role in the coming years.
“It’s really hard to see a situation where it would make sense for China to isolate itself and not focus on its trade,” said Mr Skou.
Granted, such optimism is a rare commodity in European boardrooms right now.
Amid an energy crisis, high inflation, slowing growth and the likelihood that higher interest rates will slow growth even more, it is understandable that executives of a certain age are getting flashbacks to the 1970s. Until an off-ramp is in sight on the road to ending the war in Ukraine, the outlook is unlikely to improve significantly.
However, that is a distinctly European view — and shipping’s global nature allows us to at least take solace in the optimism that is perhaps, on balance, going to ultimately pull us through elsewhere.
“I have to say if you're travelling the rest of the world as I have been recently, people are very optimistic — and they have good reasons to be,” said Mr Skou.
“I haven’t been to China, for obvious reasons, but I have travelled across Asia, I've been to India and many other places in the past six months and economies are growing, people are optimistic, the future opportunities in Africa are huge. So, yes, it’s a difficult time — but there's also a case for a better future.”
The Lloyd’s List Outlook 2023 special report, out now for subscribers, and accompanying podcast looks at the myriad of risks impacting maritime in the years ahead, providing the expert view on everything from regulation to sanctions to shipbuilding as well as the key shipping sectors – tankers, containers and dry bulk.
Download our key takeaways presentation featuring all the main quotes from our panel of industry leaders, as well as the results from our annual outlook poll.