Shipping Confidence Hits 15-Month High

Shipping industry confidence has hit the highest level in 15 months, according to the latest survey by Moore Stephens.
On a scale running from a low of one to a high of 10 in the Shipping Confidence Survey, the average level expressed by respondents in the markets in which they operate was 5.6 — the highest level seen since August 2015.
Overall shipping confidence improved for the third successive quarter in the three months to end-November 2016.
All categories of respondents expressed increased confidence over the three-month period, with the confidence rating for managers at 6.4, up from 6.0 previously.
The rating for charterers rose by two points to 6.8 — the highest figure in the life of the survey for such respondents. Confidence on the part of owners was up from 5.3 to 5.4, while for brokers, the increase was from 4.5 to 5.6.
Underscoring the rising confidence, the accountancy firm noted improved expectations for freight rates in the dry bulk, tanker and container markets as respondents felt the cycle had reached a bottom and the only way was up.
Market optimism, however, was partly offset by concerns related to overtonnaging, insufficient recycling and the cost of regulatory compliance.
“The oversupply of tonnage will cease when the banks write down bad loans and force owners to sell for scrap,” one respondent said, while another argued “the weak or unlucky will fold or be gobbled up, while the strong or the lucky will grow and succeed”.
Moore Stephens partner Richard Greiner nonetheless said: “This is the third successive increase in shipping confidence recorded by our survey. So, despite overtonnaging, weak freight rates, declining demand, insufficient recycling, Brexit, Syria, Trump, despite everything, shipping is still looking up, rather than down.”
Competition is expected to influence performance most significantly over the next year, followed by finance costs and tonnage supply.
Meanwhile, the likelihood of respondents making a major investment or significant development over the next 12 months remained unchanged, at 4.9 out of 10.0, with respondents finding it difficult to see how major investment to meet environmental regulations can be justified in the current climate.
The survey revealed that respondents expected finance costs to increase over the coming year, from 35% to 53%, the highest level for five years. However, charterers were alone in not anticipating any increase in finance costs.