Clear weather on the horizon?
PwC have just published its Global Shipping Benchmarking Analysis 2014 to provide an overview of the factors that impacted the shipping industry and to analyse how these have been reported by a large number of shipping companies from around the world.
According to the report, the year 2013 was characterized by a growing optimism. Global economic activity and world trade picked up in the second half of the year. Demand in advanced economies expanded while in emerging market economies the export activity was the main driver behind the reported improvement in the relevant measures.
In the shipping sector, freight rates in several segments turned to positive levels and both vessel values and cash flows showed some signs of recovery. Even though the macroeconomic fundamentals for 2014 are expected to show a gradual upturn performance, the first half of 2014 indicated that this recovery is erratic and not evenly spread among the various shipping sectors.The impact of the decreasing oil prices is likely to be positive depending on the strategy for bunkers.
In the current publication, PwC have also chosen to look at sustainability reporting for shipping. Their analysis shows that although sustainability has become an integral part of the business process within many land-based corporations, it has not been high on the agenda within the maritime industry.
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Statistics
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Year 2014 Outlook
Despite improved prospects, the world economy remains fragile as key downside risks of low inflation, potential capital flow reversals, geopolitical turmoil and policy implications are present.
The euro area is expected to return to growth, however demand is expected to remain sluggish, given continued financial fragmentation, tight credit and a high corporate debt burden. A major driver for global growth in 2014, comes from the United States while the forecast for China is that growth will remain broadly unchanged at about 7.5% in 2014-15.
With the world economy on an upswing and a significantly lower order book there are of course some signs for improvement. However, charter markets are expected to continue suffering from high volatility, stemming from the addition of tonnage in newly designed vessels and general tonnage oversupply, as well as changing market dynamics between subsectors and within subsectors.
For 2014 Clarksons expects the dry bulk fleet to grow at 5.1%, at a slightly faster pace than projected dry bulk demand growth (4.5%) and it is expected that the cumulative build up of the oversupply will continue to place pressure on the market. The average bulkcarrier earnings in September 2014 amounted to USD 8,636/day. The earnings for all vessel categories on September 2014 were generally lower that the 2013 average.
Sustainability
Analysis showed a significant increase of shipping companies reporting about sustainability. Almost four out of ten shipping companies report about sustainability in their 2013 corporate reports.
This indicates that the industry increasingly acknowledges the importance of informing their stakeholders about their performance on sustainability issues. For the upcoming years the industry will become subject to increased laws and regulations regarding sustainability.
Most prominent on the agenda is the upcoming regulation by the European Commission for shipping companies to start monitoring and reporting their fuel consumption (and thus CO2 emissions) for voyages to, from and between EU ports.
Further information may be found by reading the Global Shipping Benchmarking Analysis Report published by PwC (please click at image below)
Source: PwC
