The shipping industry’s fortunes should improve noticeably by 2015 if it maintains the fragile recovery which began last year as it faces tighter regulation and increased operating costs over the next several months, predicts accounting and consulting firm Moore Stephens.
“New Year resolutions are invariably a case of in one year and out the other,” said shipping partner Richard Greiner. “But the shipping industry can afford to be a little more bullish than previously in its aspirations for 2014.
“Shipping is in a different space to that which it occupied a year ago. Confidence rose to a three-year high over the course of 2013. Good things are predicted for freight rates in 2014, more companies are starting to consider new investment, and economic and political issues with the potential to hurt shipping are deemed less severe than twelve months previously.”
The London-based company said that over the next 12 months, it expects more shipping money to be raised in the public and private equity markets, and to see a closer alignment between supply and demand levels. “Consequently, freight rates are likely to rise and, with them, vessel values,” said Greiner.
Increased levels of demolition will be required to offset new tonnage. China is already offering subsidies to shipping companies to scrap vessels before their operational expiry date and to replace them with new ships which are eco-friendly and fly the Chinese flag.
Greiner warns, however, that all the positive indicators remain somewhat fragile.
He adds, “Operating costs are expected to go up in 2014. Shipping cannot operate without fuel and skilled manpower. Meanwhile, increased regulation of crew welfare, fuel quality and ballast water management are big-ticket items. Environmental regulation is self-perpetuating; witness the news that IMO is to debate plans for shipowners to compile fuel-consumption data to support steps to create carbon dioxide reduction regulations.
“It is to be hoped, however, that the industry can sustain the upturn which began in 2013. If it can, we may see a return to rude health by 2015.”