Confidence continues to improve in shipping

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Confidence in shipping has risen again over the last quarter, reaching levels not seen since the record 6.8 level seen in May 2008, according to leading shipping and insurance adviser, Moore Stephens.

In its latest survey, the City of London-headquartered firm says the average confidence level, on a scale of 1 to 10, was 6.3, compared to 5.9 in the previous survey in February – itself the highest recorded level for 15 months.

Confidence levels were at their highest for 18 months among all categories. Ship managers (up from 6.2 to 6.5) led the way followed by owners (up from 5.9 to 6.3) and charterers (from 5.8 to 6.2). “Even brokers, historically the least optimistic respondents, reported a noticeable rise in confidence, from 5.5 to 5.9,” Moore Stephens said. “Geographically, Asia recorded the most significant increase in confidence (from 6 to 6.5) among the four main regions covered by the survey (Asia, Europe, North America and Latin America) while in Europe the rise was from 5.8 to 6.1,” the firm added.

China and India dominated the minds of many respondents with one insisting that everything still seemed to be dependent on Chinese demand and purchasing power; another suggested that demand for iron ore from China and for coal from India would continue to drive the markets.

The financial crisis in Greece also exercised minds, with respondents warning that a potential new European financial crisis led by Greece and supporting countries might be a challenge for international shipping markets and could have an effect on the euro.

“Everything is very fragile and uncertain. We could all go to hell in a hand-basket very quickly if something comes out of left field to knock the economy back to square one,” one respondent claimed.

The survey again revealed concern about over-supply. “The overhang of new building orders has not yet been sorted out, and the market is likely to remain soft as a result,” one respondent said while another insisted: “Deliveries delayed in the second half of 2009 and the first half of 2010 will finally catch up on the market and result in an over-supply of tonnage.”

Another said: “Newbuilding delivery schedules for tankers, bulk carriers and container ships were not drastically affected by the financial crisis, so over-tonnaging is bound to increase over the next few years, with damaging effects on the market.”

Moore Stephens shipping partner, Richard Greiner said it was encouraging to note that, despite continuing general economic uncertainty worldwide, and irrespective of the further recent instability generated by the crisis in the Greek economy, confidence in shipping had risen for the third consecutive quarter.

“There is an undeniable mood of renewed optimism in the industry,” he said. “It is tempered by an underlying level of caution, but that is no bad thing. Those who can remember bad markets are less likely to allow themselves to be caught up in further ones.

“Most people are expecting rates to go up in the tanker, dry cargo and container ship sectors. There are signs that banks might be willing to lend once more to shipping businesses that have done their homework and those which may have spotted new, viable opportunities in a shipping market which has changed significantly during the past two years.

“All this is good news for shipping. But with operating costs on a continual upward curve, companies – and particularly those who are looking to expand – would be well-advised to proceed with care.”

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