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Industry News

Building glut casts shadow on shipping confidence

Overall confidence levels in the shipping industry have stabilised, according to a new survey by leading shipping accountants and advisers Moore Stephens.

The findings come even though the UK-based firm says sustainable market recovery still appears to be some way off, the depression in freight rates seems likely to persist and there are continued concerns about the number of new ships due on stream over the next two years.

On a scale of 1 to 10, the average rating from respondents to the latest quarterly Shipping Confidence survey was the same as before on 5.7 – although this was significantly down on the 6.8 recorded in the
launch survey in May 2008.

By sector, managers fell from 5.9 to 5.8; charterers were down 5.8 to 5.6; owners were unchanged on 5.7; and brokers edged up from 5.6 to 5.7.  By region, Asia slipped from 5.9 to 5.7 and North America from 5.8 to 5.2), but Europe continued its recent upward trend by going from 5.4 to 5.6.  

Comments on the newbuilding orderbook included. “There are too many ships already in operation, and even more to come, so there will be very little scope to increase freight rates.”  Another reply noted: “There is only enough cash to fund half the orderbook, so something has to give.”  One respondent’s suggested solution was for “the banks not to finance any more projects and for shipyards to agree to delays in delivery dates”.

For the fourth successive survey, demand trends were identified as the most important factor likely to affect business performance over the coming year - followed by competition and the cost/availability of finance.  Expectations of going ahead with a major investment or development over the next 12 months remained unchanged at 5.1 overall, with owners top-scoring on 5.4.

On freight rates, the number of tanker market respondents expecting an increase this year fell three points to 42%, dry bulk saw a similar drop to 38% and only 26% of container shipping professionals predicted an improvement compared with 35% last time.

Moore Stephens has strengthened its maritime risk management capability in a merger with AHL Business Assurance, a specialist provider of governance, risk and internal audit services.

  

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