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Shipping confidence hits four-year high

In the three months to end-February 2018, shipping confidence reached a four-year high, according to international accountant and shipping adviser Moore Stephens.

In its latest Shipping Confidence Survey, the average confidence level expressed by respondents was 6.4 out of ten, up 0.2 points over the November 2017 index.

Confidence on the part of shipowners hit a four-year high, up from 6.4 to 6.6. Ship manager confidence also increased from 6.1 to 6.4. The rating for charterers, however, continued its recent erratic performance - down to 5.0 from 7.7 in November 2017. Confidence on the part of shipbrokers, fell from 6.3 to 6.1.

The likelihood of respondents making a major investment or significant development over the next 12 months was up 0.2 points to 5.5, compared to the November 2017 survey, said Moore Stephens - the highest confidence level since May 2014.

Geographically, increased expectations of major investment were highest in Asia (up from 5.0 to 5.8). The number of respondents who expected finance costs to increase over the coming year was up from 59 percent in November 2017 to 64 percent, the highest figure since May 2008. One respondent said: "Starting next year, the industry looks set to benefit from capacity reductions at shipyards, but the cost of funding will rise for most market participants."

Demand trends were identified as the factor most likely to affect performance in the sector over the next 12 months (24 percent), followed by competition (19 percent) and finance costs (15 percent). According to one respondent: "The supply and demand equation will balance out in line with industry growth rate over the coming years."

When asked to predict crude oil prices in 12 months' time, 36 percent of respondents opted for the USD60-USD69 range, up from 29 percent when the same question was asked in February 2017. 28 percent of respondents favoured the USD70-USD79 price range, as opposed to just 10 percent 12 months ago. 

Richard Greiner, Moore Stephens partner, shipping and transport, said: "The volatile nature of the shipping industry dictates that optimism should be tempered with caution. But a four-year high in confidence must be welcomed as extremely good news.

"Shipping is more confident of making a major new investment over the next 12 months than at any time in almost four years, even though finance will probably be costlier to access in the year ahead. Net freight rate sentiment is positive in all main tonnage categories and, whilst slightly down in tankers, it increased both in the dry bulk and container ship trades."

Greiner added that familiar problems continue to affect the sector, including excess tonnage in many trades, insufficient demolition levels and freight rates below expectations. 

"In the wider world, the impact on shipping of continuing political unrest in the Middle East, the US President's proposal to impose tariffs on US steel imports, and the response of other countries to this, remains to be seen. All of this serves to underline how vulnerable shipping is to geopolitical influences. But the industry must take heart from its proven durability. Confidence breeds confidence, and confidence breeds success," he added.

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