Shipping Industry Not Quite as Upbeat About Future: Analyst

Overall confidence levels in the shipping industry fell slightly during the three-month period to May 2014, due to concerns that overtonnaging could hit freight rates, but nevertheless remain at their second-highest level for the past six years with shipmanagers in particular remaining upbeat, according to international accountant and shipping adviser Moore Stephens, as reported by shipping industry trade publication 'Maritime London'.

In May 2014, the average confidence level expressed by respondents in the markets in which they operate was 6.3, compared to February's 6.5, which was the highest figure since the 6.8 recorded when the survey was launched in May 2008.


The firm's shipping partner, Richard Greiner, says, “The small dip in confidence revealed by the latest survey is a disappointment. But it has to be viewed in context. Confidence is still at its second-highest level for four years, and the number of respondents planning to make a major investment over the next twelve months is as high as it has been at any time since August 2010. It is difficult to think of another industry, similarly exposed to political, commercial, economic and environmental pressures, which has retained the confidence of its customers and investors to the same degree.”



Ship managers were the only category of main respondent to the firm's latest Shipping Confidence Survey to report an increase in confidence. Owners, charterers and brokers were less confident than they were three months previously, at least in Europe and North America. Confidence levels remained stable in Asia.



Moore Stephens notes that expectations of new investment were maintained over the three-month period but the prospects for higher freight rates receded in the tanker and dry bulk sectors. It adds that uncertainty over the likely effect of an increase in private equity funding, and the consequent potential impact on tonnage supply, meanwhile dominated the thoughts of respondents to the survey.



Despite the small overall decline in confidence levels, a number of respondents to the survey remained upbeat. “Levels of confidence are good, and are expected to improve,” said one, while another noted, “World trade seems to be improving, and shipping will benefit.” 



Others were slightly more guarded in their responses, however. One respondent said, “The market is improving, but there are still some smaller, financially weak companies likely to go bust.” Another observed, “We have noted slight improvements in the market and are confident that more significant growth will take place in the coming months,” while others still remarked, “Demand is still high, even though operational costs have tended to increase,” and, “The shipping markets are not stable at the moment, but will pick up shortly.”


Others were slightly more guarded in their responses, however. One respondent said, “The market is improving, but there are still some smaller, financially weak companies likely to go bust.” Another observed, “We have noted slight improvements in the market and are confident that more significant growth will take place in the coming months,” while others still remarked, “Demand is still high, even though operational costs have tended to increase,” and, “The shipping markets are not stable at the moment, but will pick up shortly.”


Source: Maritime London