December 21 - Shipping confidence improved for the third successive quarter in the three months ending November 16, according to the latest Shipping Confidence Survey from international accountant and shipping adviser Moore Stephens.
In November 2016, the average confidence level expressed by respondents was 5.6 out of 10 - the highest rating since August 2015.
All main categories of respondent were more confident than in August 2016, when the overall rating was 5.4, with charterer's confidence increasing by 2 points to 6.8 - the highest figure in the life of the survey for such respondents.
The confidence of owners was up from 5.3 to 5.4, of brokers from 4.5 to 5.6, and of managers from 6 to 6.4.
Confidence was up in Asia, from 5.5 to 5.7, in Europe from 5.2 to 5.4, and in North America from 5.8 to 5.9.
A number of respondents felt that the bottom of the cycle had been reached and that the only way was up. Particular concern was expressed about overtonnaging, insufficient recycling, and the cost of regulatory compliance.
One respondent noted, "The oversupply of tonnage will cease when the banks write down bad loans and force owners to sell for scrap," while another said: "The weak or unlucky will fold or be gobbled up, while the strong or the lucky will grow and succeed."
The likelihood of respondents making a major investment or significant development over the next 12 months was, however, unchanged, at 4.9 out of 10, while charterers' confidence in this regard was up from 5 to 6.4. Owners' expectations were also up, but those of managers and brokers were down.
One respondent commented: "It is hard to see how major investment to meet environmental regulations can be justified in the current climate."
The number of respondents expecting finance costs to increase over the coming year rose from 35 percent to 53 percent, the highest level for five years.
"Major investment will be required over the next few years to meet increasingly stringent environmental regulations at a time when earnings are on the floor and bank finance is hard to come by," said one of the respondents.
Competition is expected to influence performance most significantly over the next 12 months, just ahead of demand trends, followed by finance costs and tonnage supply.
A pessimistic respondent suggested: "If demand remains weak, we don't anticipate any improvement in the shipping markets over the next five years, particularly for dry bulk cargoes."
Richard Greiner, Moore Stephens' partner, shipping and transport, said: "This is the third successive increase in shipping confidence recorded by our survey. So despite overtonnaging, weak freight rates, declining demand, insufficient recycling, Brexit, Syria, Trump, despite everything, shipping is still looking up, rather than down.
"This is not to deny the reality of today's difficult market, or the sluggish economic climate. But it does say much for the strength of shipping's backbone and the quality of its mettle."
He added: "Those who can point to a long history in shipping will be better placed to gauge the severity and longevity of the current downturn than those with a shorter pedigree in the industry. But both will need access to finance and to other resources in order to meet the challenges which lie ahead. Not the least of these is the ongoing regulatory environmental compliance programme, even if implementation of the BWM convention may be caveated with potential delay and amendment for a little while longer."
In conclusion he noted: "Many of our respondents felt that things can only get better. They are probably right. But for that to happen, freight rates will have to go up. Perhaps it is safer to say for the moment that, if we want things to stay as they are, things will have to change."