Cargo Risks Outlook 2020 - IHS Markit · 2/12/2020 · IHS Markit owns all IHS Markit logos and...

Confidential. © 2020 IHS Markit®. All rights reserved.Confidential. © 2020 IHS Markit®. All rights reserved.

Cargo Risks Outlook

2020Joint Cargo Committee Forum

12 February 2020

Confidential. © 2020 IHS Markit®. All rights reserved.

Cargo Risks Outlook 2020

2

Prospects for War in the Gulf

Competition in the Eastern Med

Civil Unrest in Latin America

Piracy in the Gulf of Guinea

Impact of Novel Coronavirus

Q&A


Prospects for War in the GulfFiras Modad - Director, Head of Middle East & North Africa

3


Strategic Shift Rather Than Isolated Event

4

New rules of engagement

• Proxy fights AND direct confrontation

• Arab Gulf energy infrastructure at risks

Cycle of escalation without off-ramp

• All-out-war risks


The Iranian Playbook: Death by a Thousand Cuts

5

Iraq: Re-launch Shia anti-US insurgency, distracting from IS fight; force US out politically

Yemen: Sink Saudi tanker, ships, strikes on GCC infrastructure

Gulf states: Terrorism, harassing aviation, targeting US personnel to raise cost of US alliance and bases

Israel: Pressure via Syria, Gaza – Iran keeps Hizbullah’s powder dry

Nuclear: Create a crisis that forces mediation


Scenarios Point to ‘Difficult to Control Confrontation’

6

Controlled

Confrontation

15%35%40%

All-Out War US De-escalatesUS Pressure

Succeeds

10%


Risks to Energy Infrastructure

7

• Abqaiq lesson: deep understanding of

regional energy infrastructure

• Objective:

> Maximise disruption to global energy markets

> Punish countries hosting the US

> Demonstrate dominance of the Persian Gulf

• Tactics:

> Combination of guided and unguided

ordnance

> Blind the radars, intensify fire

• Targets:

> Military and dual use

> Energy: Refineries, processing plants,

storage, terminals

> Desalination, civilian aviation, civilian ports


Houthi UAV Range: Most of Saudi Arabia and the UAE

8


Disruption to Shipping in the Gulf

9


War Scenario: Commercial Impacts for the GCC

10

Supply

shortages for

manufacturing

(shipping delays)

Electricity and

water shortages

(desalination

strikes)

Staff evacuation

demands in GCC

Airport and

roads

congestion

Airport closures

and disruption:

Abu Dhabi,

Manama,

Dammam, Tel

Aviv

Staff shortages

Increased non-

payment risks in

GCC

Israel-Lebanon

Israel-Gaza

Iraq energy

infrastructure,

military and

diplomatic US +

coalition targets

Greater role for

non-US firms


Competition in the Eastern MedJack Kennedy - Senior Analyst, Middle East & North Africa

11


Eastern Mediterranean Competition

12

Turkish expansionism is the new norm


Territorial Control in Libya - February 2020

13

Support for GNA Support for LNA

?


Risks to Maritime Assets

14

Two Turkish frigates

deployed off the coast of

Tripoli on 29 January 2020

Tripoli Port

Sirte Port

Benghazi Port

Derna Port


Risks to Aviation Assets

15

Hangar destroyed by LNA airstrikes, Mitiga airport

Oct 2019

Libyan Arab Air Cargo destroyed by LNA airstrikes,

Mitiga airport. Jul 2019

Hangar destroyed by LNA airstrikes, Misrata airport

Sep 2019

LNA airstrikes on Zuwarah airport

Aug 2019

GNA Bayraktar-TB2 shot down

shortly after take-off by LNA at

Mitiga Airport

22 Jan 2020


Eastern Mediterranean as Crowded Space

16

Key Risks • Elevated risk of cargo disruption crossing any disputed maritime area

• Further deployment of naval vessels from France, Italy, Israel likely

• Turkish gunboat diplomacy in disputed EEZs increases likelihood of confrontation


Civil Unrest in Latin AmericaJohanna Marris - Research Analyst, Latin America

17


Unprecedented levels of social unrest in Latin America have

caused severe ground and maritime cargo delays

18

• Violent protests in countries including Chile, Ecuador,

Colombia and Bolivia in second half of 2019, to

unprecedented levels.

• Contributing factors: economic (costs of living, access to

public services) and political (demands for stronger

democratic institutions).

• Greater willingness by demonstrators to prolong protests

to demand concessions from the government.

• For Chile, commercial losses estimated at around

USD3bn. In Bolivia USD2bn, Ecuador USD1.6bn,

Colombia USD400 million.

• Impact on cargo: road blockades, arson attacks on

vehicles, port strikes and border closures.

Riot police fire tear gas during anti-and pro-government protests in Santa Cruz, 28 Oct 2019.

Getty images.


Chile: More port and mining strikes, highway blockades

likely in 2020

19

• October 2019: Protests triggered by metro fare increase.

• 1,100+ violent incidents reported in first week

• Oct-Nov 2019: Maritime cargo export value fell 17% (by

USD2bn) and volumes by 23%. Blockades on major routes.

• In 2020: Spikes in protests likely

Main cargo risks in 2020:

> Frequent disruption in central Santiago from burning

barricades

> Protests by No+TAG movement, arson attacks on toll

booths on main highways

> Further port strikes, greatest impact on Valparaíso and

San Antonio

> Striking mining workers blocking access to/from mining

sites during 34 scheduled collective negotiations

> Cargo associations or workers joining national strikes


Bolivia: Border closures and highway blockades likely in

May-July 2020

20

• Political crisis in Oct-Nov 2019: international

border closures, highway roadblocks, all

access blocked to capital La Paz

• New elections scheduled for 3 May 2020

• Ground cargo disruption highly likely May-July

2020.

• Disruption more likely to escalate to 2019

levels if:

> Current interim President Jeanine Añez wins

the election

> Former president Evo Morales wins a seat

in the Senate or returns to Bolivia from

Argentina

> Any evidence emerges of electoral

irregularities

• Hotspots 2020: La Paz, Cochabamba, Santa

Cruz, and border crossings to Chile and Peru

As of 19 November 2019, there were a total of 71 blockades on national highways.


Mexico: Social unrest in southern states to involve rail and

road blockades in 2020

21

• President López Obrador’s support of indigenous and rural

concerns is incentivising disruptive protests:

> Rail blockades Michoacán 2019: 62 days total,

USD4.3mn in daily losses

> Road blockades Oaxaca 2019: 222 blockades on main

highways

• In 2020, protest triggers involving likely road/rail blockades:

> Construction of Maya Train and Trans-isthmic railways

> Delayed federal government payments to public sector

workers

> Increase in civilian casualties in shooting incidents by

criminal groups

• Disruption greater in Oaxaca, Chiapas, Veracruz, Tabasco,

Michoacán states

• Most affected sectors: Oil, mining, metals, agriculture,

automotive

Demonstrators protest against the Maya Train project of the government of

Andres Manuel Lopez Obrador in Mexico City on January 25, 2019. Getty

images.


Potential triggers of renewed violent protests and cargo

disruption in 2020

22

Country Trigger in 2020 Nature of likely protest

Argentina Increase in export taxes Roadblocks in Buenos Aires, Santa Fe, Cordova and La

Pampa provinces, impacting Rosario port

Argentina Deeper government spending cuts in

second half of 2020

Truckers strikes and protests

Brazil Significant increase in fuel prices National strikes by truckers’ associations, lasting up to 2

weeks

Brazil Supreme Court reversing cargo tariffs

introduced by previous government

National strikes by truckers’ associations, lasting up to 2

weeks

Colombia Breakdown of negotiations between

government and civil/labour organisations

Renewed national protests, affecting main inter-city

transport routes and blocking access to Buenaventura port

Costa Rica Public salary cuts, dismissals or new

taxes

Cargo drivers joining public worker strikes, disrupting cargo

on Route 32 to Limón port

Peru Complaints over water pollution at mining

and oil projects

Violent protests and road blockades in Loreto, Apurimac,

Cusco, Arequipa, Puno and Moquegua, and disrupt cargo

to Matarani port


Piracy in the Gulf of GuineaMartin Roberts - Principal Analyst, Sub-Saharan Africa

23


Gulf of Guinea Piracy Incidents: Jan 2019 - Feb 2020

24


25


Piracy Outlook

• Use of motherships responsible for surge in Gulf of Guinea kidnapping in

December 2019 – nearly as many victims as the rest of the year totalled

• Concerted action against motherships unlikely, with return of rainy season the

most likely deterrent

• Serious efforts to tackle Niger Delta-based pirate gangs depend on Nigerian

government, which is unlikely to act because of multiple vested interests

26

• Focus will remain firmly on the

lucrative practice of kidnap for

ransom

• The anchorages of Nigeria’s

neighbours remain at risk, but pirates

have opened a new front along the

borders of its EEZ, exploiting

haphazard patrolling and unclear

jurisdictions


Impact of Novel CoronavirusKeerti Rajan - Director, Head of Asia-Pacific

27


28

Novel Coronavirus Impact

• China is a much larger part of the world economy today than in 2002-03 (SARS outbreak).

– 16% of global GDP

– Largest commodity consumer

– Outward tourism has soared with GDP/ capita

• GLM ‘severe’ scenario:

– Confinement measures in place to end-Feb; 5-week rather than seasonal 10-day shutdown.


29

Novel Coronavirus Impact


• Force majeure

> Chinese law more relaxed than western law.

> Total, Shell in dispute over LNG.

> Reuters: “At least 97 Chinese enterprises had

received force majeure certificates from the council

as of Monday. The industries cut across a wide

spectrum, including steel, apparel, paper products

and construction materials.”

> SOEs likely to run losses, given policy bank

support and government guarantees.

• Cargo

> No cargo scores changed.

> No marine/ air war or strikes

> Perishables?

30

Insurable Perils


• Known unknowns

> Incubation period

> Infective period

> Reproductive rate

• No therapeutics confirmed

• Peak?

> New case rate not stable.

> Cases likely under-reported

> Fatality rate to decrease?

31

Outlook


Questions?

32

IHS Markit Customer Care

[email protected]

Americas: +1 800 IHS CARE (+1 800 447 2273)

Europe, Middle East, and Africa: +44 (0) 1344 328 300

Asia and the Pacific Rim: +604 291 3600

Disclaimer

The information contained in this presentation is confidential. Any unauthorized use, disclosure, reproduction, or dissemination, in full or in part, in any media or by any

means, without the prior written permission of IHS Markit or any of its affiliates ("IHS Markit") is strictly prohibited. IHS Markit owns all IHS Markit logos and trade names

contained in this presentation that are subject to license. Opinions, statements, estimates, and projections in this presentation (including other media) are solely those of the

individual author(s) at the time of writing and do not necessarily reflect the opinions of IHS Markit. Neither IHS Markit nor the author(s) has any obligation to update this

presentation in the event that any content, opinion, statement, estimate, or projection (collectively, "information") changes or subsequently becomes inaccurate. IHS Markit

makes no warranty, expressed or implied, as to the accuracy, completeness, or timeliness of any information in this presentation, and shall not in any way be liable to any

recipient for any inaccuracies or omissions. Without limiting the foregoing, IHS Markit shall have no liability whatsoever to any recipient, whether in contract, in tort (including

negligence), under warranty, under statute or otherwise, in respect of any loss or damage suffered by any recipient as a result of or in connection with any information

provided, or any course of action determined, by it or any third party, whether or not based on any information provided. The inclusion of a link to an external website by IHS

Markit should not be understood to be an endorsement of that website or the site's owners (or their products/services). IHS Markit is not responsible for either the content or

output of external websites. Copyright © 2019, IHS Markit®. All rights reserved and all intellectual property rights are retained by IHS Markit.

33

Contact

Columb Strack

Principal Analyst - Middle East & North Africa

IHS Markit Country Risk

[email protected]

mailto:[email protected]

Cargo Risks Outlook 2020 - IHS Markit · 2/12/2020 · IHS Markit owns all IHS Markit logos and...

Documents

Transcript of Cargo Risks Outlook 2020 - IHS Markit · 2/12/2020 · IHS Markit owns all IHS Markit logos and...