Confidence in Shipping sector ‘at highest level since 2008’

Confidence in the shipping industry has significantly risen over the past six months, according to the latest Shipping Confidence Survey by accountancy and business advisory firm BDO. The average confidence level recorded by the survey was 7.2 out of a possible maximum of 10.0, the highest since the survey began (under Moore Stephens) in May 2008, while the intention to make a major investment also reached an all-time high of 6.1%

“The rising tide of confidence is taking everyone with it with growing confidence across all business types and regions,” comments Richard Greiner, BDO Partner, Shipping & Transport. “It is evident that our resilient industry has turned a corner on the COVID-19 pandemic.”

Among different business and geographical sectors, both Brokers and Managers are reported as having reached ‘record levels of confidence” with scores of 7.4 and 8.0 respectively. Asia leads the way with confidence at 7.7 but Europe has also reached “unprecedented levels” of confidence, says BDO, at 7.2.

Freight markets
As regards individual freight markets, the current tanker market remains depressed but the net freight rate sentiment there has continued to climb reaching +57%, with Owners and Managers driving the high score. Regionally the net sentiment is very positive in both Europe and Asia, notes BDO.

The dry bulk market is buoyant at present, as reflected by the BDI (Baltic Dry Index) remaining at high levels, but the overall proportion of respondents expecting higher dry bulk rates has dropped again since February with net sentiment now sitting at +19%, Asia in particular having downgraded expectations from +55% to -16%, leading BDO to conclude that “respondents do not expect growth to continue at the same pace in the medium term.”

Container ship rates expectations have risen from an unprecedented -36% low in February to -20% but this softening of future sentiment in general should be seen in the context of “sector rates being at exceptionally high levels over the course of the year to date,” notes BDO.

Conclusions
“Maintaining the strong positive sentiment will be important as the industry faces a number of significant challenges ahead,” concludes the BDO report. “Most importantly against a backdrop of ever-increasing environmental awareness, the industry must adapt so that it can continue to play its role in meeting the future transport requirements of the world.

“As economies around the globe have emerged from the pandemic, seaborne trade has recovered and should continue to grow through the coming years. Given this, the shipping industry has every reason to remain confident about its future.”