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Shipping confidence rises
There was good news for shipping from international accountant and shipping adviser Moore Stephens. According to the firm’s latest Shipping Confidence Survey, overall confidence levels in the shipping industry rose to their highest level for almost six years in the three-month period to February 2014. Freight rates look set to improve or maintain existing levels over the next 12 months, while an increase in private equity funding is expected to have a major impact on the industry. In February 2014, the average confidence level expressed by respondents in the markets in which they operate was 6.5 on a scale of 1 (low) to 10 (high), compared with the 6.1 recorded in the previous survey in November 2013. This is the highest figure since the 6.8 recorded when the survey was launched in May 2008. All categories of respondent to the survey reported improved levels of confidence compared with the previous survey. Confidence on the part of owners was up from 6.2 to 6.6, while the rating for charterers (up from 5.7 to 6.5) was the highest in the life of the survey. The rating for managers was up from 6.1 to 6.4, while that for brokers was up to 6.4 from the previous level of 5.6. Geographically, confidence was up in Asia (from 5.9 to 6.4), in Europe (from 6.1 to 6.4), and in North America (from 6.6 to 7.1). However, Moore Stephens notes: “The mood of improving confidence 30
evident in many of the responses to the survey was tempered by an awareness of the difficulties which the industry still faces.” One respondent said: “There are signs that we have passed the deepest point of the recession. The only question now is how long it will take for the markets to improve to the point where we have sustainable rates again. It may be that some shipowners will still not make it because time – or cash and the patience of the banks – will run out.” A number of respondents referred to the rising cost of fuel as a significant performance-affecting factor. “Fuel prices are a deterrent,” said one. “Freight rates have increased, but fuel prices eat into time-charter equivalents.” Moore Stephens’ shipping partner, Richard Greiner, says: “Six years is a long time in shipping. Indeed, based on empirical evidence, it is long enough to qualify as a cycle in what is a historically cyclical industry. It is perhaps too soon to say that we have reached the end of the most recent downward cycle, but it seems that the worst may be over. This latest survey finds confidence in shipping at its highest level since 2008, with genuine prospects for further improvement over the next 12 to 18 months.” He adds: “The outlook in all the major freight markets is brighter
than at any time in recent memory, not least because some of the fears about over-tonnaging have been eased by increased scrapping and by a more pragmatic approach to business expansion, albeit one dictated by necessity. Despite continuing difficulties in certain parts of the world, some of the volatility has been taken out of the global economic and political crises which have characterised the passage of the past few years. That is good for trade and good for shipping.”
Richard Greiner
World Bunkering Summer 2014