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New low in shipping confidence

March 24 - Overall confidence levels in the shipping industry fell to a record low in the three months to February 2016, according to the latest Shipping Confidence Survey from Moore Stephens.

The average confidence level expressed by respondents in the markets in which they operate was 5 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 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, noted Moore Stephens, while particular concern was expressed about the state of the dry bulk market, as well as the need for accelerated demolition.

Falling oil prices were also a recurring topic in responses to the Moore Stephens survey, with some respondents concerned about the effect of the slowdown on the offshore maritime sector.

The likelihood of respondents making a major investment or significant development over the next 12 months was also down on the previous survey, from 5.2 to 4.8. "Weak demand is undermining confidence and investment," said one respondent.

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.

The survey also asked respondents at which level they expected crude oil prices to be at in 12 months' time. 31 percent predicted that the price would be between USD30 and USD39, 26 percent forecast a figure of between USD40 and USD49 and 10 percent thought the price would fall between USD20 and USD29.

"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 Moore Stephens partner Richard Greiner.

"When the Baltic Dry Index drops to an all-time low it is a real indication of the problems facing the shipping industry. The BDI doesn't lie, and any doubts about the extent of those problems would have been dispelled over the past three months when reports of the fall in the BDI started to appear in the mass media, which generally carries only bad news insofar as it impacts the shipping industry."

He noted that the BDI has started to move upwards once more, however, which could be good news for the industry.

"In a climate of continuing overcapacity, increased regulation, ongoing political unrest and economic instability, the shipping industry must find a way to supplement the bread-and-butter of its livelihood - the freight markets," added Greiner.

www.moorestephens.co.uk

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