Overall confidence levels in the shipping industry fell to a record low in the three months to February 2016, according to results of the latest shipping confidence survey conducted by international accountant and shipping adviser Moore Stephens.
“Shipping continued along its volatile course in the three months to end-February 2016, with the confidence of industry participants reaching the lowest level since our survey was launched in May 2008. This is disappointing and unsurprising in equal measure,” said the consultancy.
The average confidence level of respondents in the markets in which they operate was 5.0 on a scale of 1 (low) to 10 (high). This compares to the 5.6 recorded in November 2015, and is the lowest rating in the life of the survey, which was launched in May 2008 with a confidence rating of 6.8.
All main categories of respondent with the exception of brokers (up from 4.6 to 5.1) recorded a fall in confidence this time, most notably charterers (down from 5.5 to 3.9), which is the lowest confidence rating by any category of respondent in the history of the survey. Confidence on the part of owners and managers was also down, from 5.7 to 4.8 and from 5.8 to 5.5, respectively.
Geographically, confidence was down in all major areas covered by the survey—in Asia from 6.0 to 4.4, in Europe from 5.4 to 5.1, and in North America from 5.7 to 4.7.
A number of respondents continued to express concern about the level of overtonnaging, the need for accelerated demolition, and the impact of falling oil prices.
The likelihood of respondents making a major investment or significant development over the next 12 months was down on the previous survey, on a scale of 1 to 10, from 5.2 to 4.8, which equals the figure recorded in February 2009 as the lowest in the life of the survey to date.
Owners, managers, and brokers were less confident in this regard than they were three months ago, but the confidence of charterers was up, from 4.8 to 5.1.
The number of respondents who expected finance costs to increase over the next 12 months was down by five percentage points on last time, to 42%.
Demand trends, competition, and tonnage supply featured as the top three factors cited by respondents as those likely to influence performance most significantly over the coming 12 months.
Despite the gloomy developments in the shipping industry, Moore Stephens keeps a hopeful outlook. “In any industry, the price of a service or product must exceed the cost of providing that service or product in order to achieve a return on investment. In shipping, that is simply not happening at present. Operating costs are going up while freight rates generally are not even keeping pace. Nobody doubts the ability of shipping to bounce back. It has a long history of doing just that. This time, the only question is when,” it said.
Photo: Clipper – Own work
