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Shipping confidence impacted by trade wars

Ongoing concerns over trade wars and increased regulations are having an adverse effect on confidence in the shipping industry, according to the latest survey from BDO (formerly Moore Stephens).

Richard Greiner, BDO.

Over the past three months confidence has fallen marginally, with the average confidence level standing at 6.1 out 10, compared to the 6.2 recorded in February.

Geographically, confidence levels in Europe dropped from 6.3 to 6.1. However, confidence was up in Asia (6) and North America (6.4), compared to their previous confidence levels of 5.8 and 5.6, respectively.

Richard Greiner, partner, shipping and transport at BDO, said: “A small dip in confidence is not surprising given the recent volatility generated by the US-China trade wars, the heightened tension in the Middle East Gulf, the failure to conclude Brexit negotiations, and general political instability in many parts of the world. Markets love volatility, but it can have an adverse effect on confidence.

“Trade wars certainly formed the overarching theme for this quarter, but they are not the only recurring topic. The cost and technical implications of complying with existing and incipient regulation was referenced on a number of occasions, typified by the respondent who noted that the high level of regulation ‘makes it extremely difficult to make a profit’.”

Despite the challenges the industry is facing, there are a number of positive indicators, according to Greiner. He acknowledged that new technology is making shipping more attractive to investors, and will act as a trigger to accelerate the pace and extent of recycling. “Higher freight rates should logically follow, and those who hold their nerve will ultimately benefit,” Greiner concluded.

www.bdo.co.uk

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