Posted on: 26 September 2015
Overall confidence levels in the shipping industry rose in the three months ended August 2015 to their highest level this year, according to the latest Shipping Confidence Survey from international accountant and shipping adviser Moore Stephens. Respondents to the survey were concerned predominantly about low freight rates and overtonnaging, with continuing doubts also expressed about private equity funding.
In August 2015, the average confidence level expressed by respondents in the markets in which they operate was 5.9 on a scale of 1 (low) to 10 (high). This compares to the 5.3 recorded in May 2015, which equalled the lowest figure recorded in the life of the survey, launched in May 2008 with a confidence rating of 6.8.
All main categories of respondent recorded an increase in confidence this time, most notably charterers (up from 4.2 to 6.5) and owners (up from 5.1 to 5.8). The confidence of brokers, meanwhile, was up from 4.8 to 5.2, and that of managers from 6.1 to 6.4.
Geographically, confidence was up in Asia from 4.9 to 5.8, in Europe from 5.3 to 5.9, and in North America from 6.0 to 6.3.
While some respondents were confident that the shipping markets would improve in line with economic developments, others were more cautious. One said, “The shipping markets have been over-stocked, and there has been far too much interest from non-traditional shipping sources with no real clue how these intricate markets work. Once built, the ships are there! The low oil cost means the drive for alternative fuels and cheaper propulsion is not being followed as diligently as one might have expected.”
A number of respondents echoed the concern about the potentially harmful effect of the entry into the market of non-traditional shipping sources, while there was the usual level of concern about too many ships and too little scrapping. Increased regulation was another recurring topic, with one respondent complaining, “Regulations are going to kill us!”
The likelihood of respondents making a major investment or significant development over the next 12 months was up on the previous survey, on a scale of 1 to 10, from 5.0 to 5.3, equalling the highest figure over the past 12 months. All main categories of respondent were more confident in this regard than they were three months ago, most notably charterers (up from 4.5 to 6.1).
Competition, demand trends and finance costs featured as the top three factors cited by respondents as those likely to influence performance most significantly over the coming 12 months. The numbers for competition were up 5 percentage points on last time to 25%. There was a one percentage-point drop (to 23%) in the numbers citing demand trends in this regard, and an increase of 4 percentage points (to 18%) for finance costs. Operating costs, unchanged at 11 %, featured in fourth place, ahead of tonnage supply, down 8 percentage points to 7%. Fuel costs, crew supply, regulation and port congestion occupied the remaining places.
There was a fall in the number of respondents anticipating higher freight rates in the tanker and container ship sectors, but expectations of improved rates in the dry bulk trades were up on the figures for May 2015. There was a positive overall net sentiment for all three tonnage categories: +12 for tankers, +21 for dry bulk, and +3 for container ships.
Richard Greiner, Moore Stephens Partner, Shipping Industry Group says: “It is always encouraging to see a graph moving in the right direction. Perversely, the main reason for the improved level of confidence revealed by our latest survey may be the same as that which saw the industry’s perceived fortunes equalling a seven-year low in May of this year. Volatility works both ways”.
