Shock, Joy and Fear! Reactions of Maritime Industry

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Trump’s Victory raised new uncertainties for shipping firms, which are already struggling through the weakest market in memory.  Here is the summary of some mixed reactions from the industry.

OPEC Deal Becomes More Urgent, Harder to Reach on Trump Win

  • Trump’s various policy positions could either support or weaken oil prices
  • Trump could try to boost U.S. output, block climate accord

“The pressure on OPEC to come up with a deal only increases in the wake of Trump’s victory,” said Giovanni Staunovo, an analyst at UBS in Zurich.  “Even though the oil market is rebalancing, the political uncertainty in the short term leaves oil prices vulnerable to downside, that makes it more urgent for OPEC to act.”

“There’s a bit of fog coming down — it just adds a bit more uncertainty, for OPEC and everybody else,” said David Hufton, chief executive officer of brokers PVM Group Ltd. in London.

“The Trump Administration is a huge black box for many analysts on every subject area,” said Dewardic McNeal, managing director at consultant Longview Global LLC in Washington. “One would suggest that OPEC not delay tough decisions for some future date.”

Source: Bloomberg

US flag may find safe harbour under Trump

President-elect Donald Trump’s emphasis on national security and growing jobs on the home front could be positive for US-flag shipping and shipbuilding, according to industry insiders.

“I think if Donald Trump is to be believed and is sincere in his expressions of support and desire to maintain a US jobs base, that would tend to indicate that the US flag and the Jones Act would receive some level of support,” said former acting US Maritime Administrator John Graykowski, now a principal with Maritime Industry Consultants.

“I would also hope he would turn his attention to US shipbuilding, to see it as a phenomenal opportunity for job creation, and the growth of high-skilled manufacturing jobs – which again seems to be consistent with some of the themes he struck during his campaign.”

Charles Papavizas, a Washington, DC-based lawyer with Winston & Strawn, agreed that “one could make a case that [Trump] is going to be quite positive for the US flag,” said Papavizas “It’s essential for national defence, and it’s considered by some to be anti-free trade.  Those are what appear to be two basic aspects of Donald Trump.  He also wants America first.  The US flag fits the bill exactly.”

But trade deals such as the NAFTA and the Trans-Pacific Partnership (TPP) are complicated, Papavizas points out, affecting both import and exports and the supply chains in which goods move.

“I don’t think whether or not TPP goes or doesn’t go will have that significant effect on world trade,” he said.

“People make the assumption that if free trade is restricted it will mean less ocean shipping. I think that’s an overly simplistic way of thinking of things.  It depends on how free trade is restricted, and where it’s restricted.”

Source: IHS Fairplay

Maersk European carrier most exposed to Trump’s trade policies

A.P. Moller-Maersk A/S, the owner of the world’s biggest container shipping line, saw its shares sank as much as 5.6 percent to trade 3.5 percent lower.

“The risk of increased protectionism may derail a recovery in global trade,” David Kerstens, an analyst at Jefferies International, said in a note on Wednesday.  He listed Maersk as one of the companies “most affected” by the threat.

“It’s uncertain what the fate of TTIP will be,” Rasmussen said.  He went on to underscore his nation’s reliance on well-functioning trade relations.  “Denmark is a country that has generated all its wealth through trade with others.”

According to Helge Pedersen, chief economist at Nordea in Denmark, Trump’s victory may trigger a U.S. recession in connection with the trade war that could ensue from his policies.

Source: Bloomberg

The US economy is still the major driver of international trade.  Any move towards a more isolationist policy by the US could therefore have severe implications for the maritime sector from a number of perspectives.

For the moment, and until he takes office in January, what President Trump will actually do remains speculative and there are many people who believe he will be more pragmatic.  But until we see exactly what his policies will be the maritime industry will be in a state of uncertainty, which at present it can little afford.

Source: Tanker Shipping & Trade

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