Shipping & ports

The shipping sector is faced by a consolidation trend resulting in increased vertical and horizontal integration.

Moreover, the vast majority of the current world trade is being carried by the international shipping industry.

The shipping sector is faced by a consolidation trend resulting in increased vertical and horizontal integration. Moreover, the vast majority of the current world trade is being carried by the international shipping industry.

Without shipping, the import and export of goods on the scale necessary in our current economical and social environment would not be possible.

Ships are technically sophisticated, high value assets - larger hi-tech vessels can cost over US$150 million to build - and the operation of merchant ships generates an estimated annual income of over US$380 billion in freight rates, representing about 5% of the total global economy.

There are around 50,000 merchant ships trading internationally, transporting every kind of cargo. The world fleet is registered in over 150 nations, and manned by over a million seafarers of virtually every nationality.

Maritime Carbon Compliance

Are you ready for mandatory CO2 emissions reporting?

Starting July 2019, ships arriving at, within or departing from a port under the jurisdiction of a Member State, and which have carried out voyages during 2018, need to carry a valid document of compliance (DOC) on board. A DOC will be issued by an accredited verifier when the ship’s Annual Emissions Report outlining the emissions data from voyages has been verified and found to be free from material misstatements and in accordance with the ship’s monitoring plan. This plan will also need to be assessed for compliance with EU legislation.


Reporting will be mandatory for ships > 5.000 gross tonnes

The matitime industry contributes to approximately 2.5% of global emissions, which is expected to double in the coming decades (in line with expected increase in trade volumes).

1st compliance deadline 31 August 2017

Estimated 180 megatonnes CO2 in scope based on 2010 data

April 30, 2019: Deadline for submitting a verified emissions report. June 30, 2019: Deadline for obtaining a document of compliance

An estimated 11.000 ships would need to comply

Some of the other challenges and opportunities for the shipping industry

Safety & Security

Shipping companies have the primary responsibility for adhering to high standards of safety and environmental performance. Regulating to ensure safety of life at sea has always been the principal function of the International Maritime Organisation (IMO), and the primary role of the International Chamber of Shipping (ICS).

The International Shipping Federation (ISF) is to represent the considered opinion of the international industry and to suggest measures to improve safety - and to prevent pollution – developed through consensus amongst the world’s maritime administrations.

Tracking & Tracing - Radio Frequency Identification

Shippers face challenges such as security threats (including misplacement, theft, product tampering, and illegal uses or even terrorist attacks) and inefficient use of labour and equipment for tracking goods and containers. International supply chains have a complex and dynamic nature. Accurately tracking and managing the flow of goods is therefore challenging and costly.

Radio Frequency Identification (RFID) is a technology that is being used today for automatic identification and traceability through supply chains due to the multi-party and multi-modal nature of the global supply chain. It improves significantly visibility and helps to move goods more efficiently through the global supply chain. It differs from barcodes because RFID requires no-line of sight.

A variant of RFID uses active tags containing a battery, which are used in Real Time Location Systems (RTLS). Apart from identification, the RFID tag is also used to determine the exact location of the goods. In addition, the battery power enables the recording of vibrations, shock, temperature or movement.

Authorised Economic Operator

An EU initiative increasing safety, efficiency and speed

The European Union has embedded the initiative of the World Custom Organisation to improve security of the supply chain in the ‘Authorised Economic Operator’ programme. This initiative was converted into the legislation of the different EU member states.

Certified Economic Operators will be treated as reliable trade partners and will have access to ‘green lanes’ which will increase safety, efficiency and speed of the supply chain. The ‘AEO’ status will become an undeniable need for all companies who envisage to participate efficiently and cost-minded in the supply chain.

In return for AEO certification, companies will need to benchmark and adjust their internal control processes affecting the supply chain against the EU member state ‘AEO’ requirements. In order to live up to the standards imposed by the custom authorities, companies will carefully need to review control processes in place and to act as pioneers in the use of innovative techniques.

Asset Management

The Shipping and Ports industry is extremely capital intensive. Well thought-out capital allocation decisions are essential to maintain competitiveness.

Investments in ships, infrastructure, ports, warehouses and terminals requires a high level of working capital to be spent on new assets, replacements and maintenance. Developments in the environment make asset management more and more complex.

Management must cope with major challenges such as achieving higher asset utilisation, decreasing capital and operational expenditures, managing risks efficiently and weighing the options for all stakeholders.

Asset (lifecycle) management is the process of establishing an operating environment under which capital returns are improved through effective management of risks inherent in owning, managing and operating a large asset base. Companies may be an asset owner, asset manager, service provider, or some combination of these roles.

Companies need to take care to assess the expected benefits of spending (e.g. improvement of financial performance, availability, improvement of environmental performance of health and safety issues) to ensure that the right investments are made. They also need to be prepared to document to stakeholders how these investments create and increase value.

Increasing transparency, decreasing cost, improving reliability and availability of assets and improving on performance in health, safety and environment are key goals of a considered approach to asset management.

Fuel price exposures

Shipping companies are structurally exposed to fuel price risks. Increasing fuel prices may impair the profitability going forward. Given the high fuel prices shipping companies have been confronted with in FY 2008 they are considering to increase their protection through the use of financial derivatives, either locking-in future purchase prices on forecasted purchases of fuel with forward or swap contracts, or by entering into options to cap the forecasted purchase prices at maximum level, or within a range with a collar.

When your functional currency or costs/ revenues are other than USD, you, as a shipping company, are also substantially exposed to USD risk on purchases of fuel since fuel is internationally quoted in USD. Shipping companies may also be exposed to foreign currency risks on the revenue side.

The strong global economic growth and favourable geographical distribution have, until the economical and financial crisis of Q4 – 2008, more than doubled the tonnage demand growth rate from the 1990s to this decade: from 3% to 6.5%. Increased sailing distances, more port congestion and longer waiting time for repair and maintenance added to a robust growth in transport volumes.

The challenge of reducing carbon emissions is undoubtedly a critical issue for the shipping industry, not only with regard to agreeing what level of reduction might be practical and feasible, but also in respect of the implications of possible solutions for shipping’s economic well being and its environmental image.

Contact us

Matthias Reyntjens

Matthias Reyntjens

Partner, Platforms & Industries Leader, Consulting Lead, PwC Belgium

Tel: +32 476 44 53 92

Peter Van den Eynde

Peter Van den Eynde

Partner, PwC Belgium

Tel: +32 477 56 15 09

Tom Scheyvaerts

Tom Scheyvaerts

Director, PwC Belgium

Tel: +32 47 761 8059

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