Home » Maritime » Moody’s sees ‘negative’ outlook for shipping over coming 12 months

The outlook for the shipping industry over the next several months is “negative” due to continued vessel oversupply, an international credit rating agency predicts.

In an industry outlook report published July 12, Moody’s Investors Service said industry conditions were likely to deteriorate in the next 12 to 18 months, with the dry-bulk sector to be the most adversely affected because of its large order book.

The current dry-bulk order book is equal to about 46 percent of the tonnage on the water, and around 80 percent of these vessels are due for delivery over the next two years, creating a supply-demand imbalance that will continue to depress freight rates, said Marco Vetulli, Moody’s senior credit officer.

Because of oversupply and limited cargo, the tanker segment is likely to find 2011 another challenging year despite the rise in oil demand over the past 18 months, according to Moody’s. It said a sustained recovery was unlikely until the latter half of 2012, or even 2013, when supply and demand become more balanced.

In container shipping, Moody’s said its expectations for the second half of 2011 remain “neutral,” noting that supply and demand in 2011 would be more broadly matched, although very fragilely balanced.

It said that although major industry players posted acceptable financial performances in the first quarter of 2011, revenues are expected to falter in the second quarter due to softening demand and the scheduled delivery of several large vessels.

Moody’s said that Japanese shipping conglomerates were being less affected by the negative trends in global shipping because of their scale, diversification and strong customer relations. It forecast that the earthquake and tsunami in Japan last March would have a short-lived impact on the supply chain, and volume would revert to pre-earthquake levels in the fourth quarter of the year.

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