Shipping confidence continued its high rating in the past three and a half years in the three months to end-November 2017, according to the latest Shipping Confidence Survey, published by the international accountant and shipping adviser Moore Stephens.
The average confidence level expressed by respondents remained at the level of 6.2 out of 10.0 in the previous survey in August 2017. Confidence on the part of charterers was increased, from 4.7 to 7.7, the highest rating recorded for this category of respondent since the s start of the survey in May 2008 with an overall rating of 6.8.
Managers seemed more optimistic, while brokers’ confidence did not change at 6.3.
“A slowdown in newbuilding activity has started to redress the imbalance in supply and demand, and that should be reflected in improved freight rates. There is an appetite for investment, and finance is available. The shipping recovery might not yet be fully under way, but 2017 may come to be regarded as the year when the downward spiral was halted,” Richard Greiner, Moore Stephens partner, Shipping & Transport said.
The rating for owners, on the other hand, decreased from 6.5 to 6.4. Confidence levels were down in Asia as well, from 6.4 to 5.7, and unchanged in Europe and North America, at 6.3 and 5.8 respectively.
The possibility of respondents to make a major investment or significant development over the next 12 months was down from 5.4 to 5.3 out of 10.0. Charterers’ confidence, however, increased from 4.0 to 6.2.
Expectations regarding owners and brokers were up from 5.8 to 5.9 and from 4.4 to 5.3 respectively, but down from 5.4 to 5.3 for managers. Asian respondents were less confident in this matter, but in North America the rating went up from 4.9 to 5.4, while in Europe, expectations held steady at 5.2.
Albeit the overall expectations of making major investments over the next 12 months were marginally down, some respondents saw encouraging signs of recovery, and potential for further improvement, especially in the bulk sector.
“Charterers are leading the way in terms of improved confidence and appetite for new investment. There is optimism in the dry bulk trades, and evidence of continuing improved confidence in the gas sector. The Baltic Dry Index, meanwhile, has risen by over 50% in the past six months, and net sentiment in all three main tonnage categories remains positive,” Mr. Greiner noted Shipping & Transport said.
59% of respondents believe finance costs will increase over the coming year, up from 50% last time. Owners’ expectations were up from 48% to 54%, while the increase for charterers was from 67% to 83%, and for brokers from 42% to 60%. Managers, meanwhile, went down from 62% to 61%.
Demand trends continued to influence performance most significantly over the coming 12 months followed by competition and finance costs.
The number of respondents waiting for higher freight rates over the next 12 months in the tanker market reduced by 1%, to 44%, while there was a one percentage-point fall, to 13%, in those anticipating lower rates.
Half of the respondents expect higher rates in the dry bulk sector, and 12% anticipates lower rates. As far as the container ship sector is concerned, the numbers expecting higher rates dropped by 4% points to 36%, while there was a 2% fall, to 15%, in those expecting lower container ship rates.
When respondents were asked to estimate where the US Federal Reserve’s Federal Funds Rate would bein 12 months’ time, 35% answered at 1.50%, with 24% saying 1.75%.
6% of respondents put the figure to 2.00% and 19% opted for 1.25%. 8% of all respondents answered 1.00% and less than 1.00%, while 1% expectes the rate to be more than 2.00%.
Richard Greiner concluded by saying that: “Not all our respondents were upbeat and uncertainty persists, for example, over how and when to comply with the Ballast Water Management Convention and the true extent of cyber-crime. But the portents, overall, are encouraging. “
