The roll-on, roll-off shipping market is in a relatively upbeat mood after emerging surprisingly unscathed from a year of tough economic and geopolitical challenges. The outlook for pure car carriers, however, is looking less rosy against a backdrop of rising supply and subdued global demand for automobiles and shrinking shipments to previously fast-growing markets such as Russia, Nigeria and Brazil because of collapsing oil revenue and depreciating currencies.

These niche markets rarely make headlines in an industry dominated by container ships, tankers and bulk carriers. When they do, it’s usually because of negative news such as last October’s sinking of the El Faro off the Bahamas with the loss of 33 lives and the antitrust fines imposed on large car carriers by regulators in several markets, including China, the U.S. and South Africa.

Car carriers have had to cope with market conditions that have been just as volatile as those for their bigger industry counterparts and are bracing for a new round of consolidation that likely will result in some big names joining forces and others shutting down.

From a wider ro-ro perspective, the introduction of the low-sulfur fuel regulation in the primary markets in the North Sea, the English Channel and the Baltic Sea in January 2015 was viewed as a game-changer that would “shake the sector in its foundations,” according to ship broker and consultant Barry Rogliano Salles.

But it didn’t, largely because low bunker fuel prices put a cap on operating costs, ruling out the need to raise freight rates significantly at the risk of losing business to rival modes, notably trucking.

“Overall, the industry showed good resilience and adapted well to the new market conditions riding on the wave of solid cargo flows in North Europe, the western Mediterranean and Turkey,” Paris-based BRS said recently.

The industry’s fears that the new emission regulations would lead to bankruptcies, route closures and the loss of cargo to trucking in the key North European market never materialized, though the recent modest rise in oil prices still could impact inefficient operators. For now, the outlook appears relatively optimistic, with the largest companies confident of repeating 2015’s healthy profits.

Excerpt written by Bruce Barnard, Special Correspondent of IHS / JOC