Overall confidence levels in the shipping industry recovered slightly from their lowest level for over four years in the three months ended November 2012, according to the latest Shipping Confidence Survey from international accountant and shipping adviser Moore Stephens.The small uptick in confidence appears to be related, among other things, to an increase in scrapping and to the start of a gradual improvement in the overtonnaging crisis which has dogged the industry for several years. Improved confidence is also reflected in a marginal increase in planned investments over the coming year.
In November 2012, the average confidence level expressed by respondents in the markets in which they operate was 5.6 on a scale of 1 (low) to 10 (high), compared to the figure of 5.3 recorded in the previous survey in August 2012. The survey was launched in May 2008 with a confidence rating of 6.8.
Charterers were the only category of respondent to report a fall in confidence over the three-month period, in direct contrast to the previous survey, when they were alone in expressing increased confidence in the market. Charterers’ confidence rating this time of 5.6 was marginally down on the 5.7 recorded in August 2012.
Confidence on the part of owners, meanwhile, was up to 5.5 from 5.1 last time, while managers (up from 5.9 to 6.0) and brokers (up from 5.0 to 5.3) saw more reason to be optimistic this time around.
Geographically, confidence in Asia was up to 6.0 from the all-time survey low of 5.4 recorded in August 2012. Confidence was also up in Europe (from 5.2 to 5.3) and in North America (from 5.5 to 6.6).
A number of respondents saw encouraging signs in terms of a correction in the overtonnaging crisis which has gripped the market in recent years. “Markets will remain low for the next eight months,” said one, “but there are signs of recovery based on a significant reduction in the number of new deliveries.” Another noted, “New orders have declined, and the opportunities envisaged by those owners who ordered newbuildings which are now in service will start to materialise, while older tonnage will disappear as charterers look for newer, more efficient vessels.” Yet another emphasised, “The overhang of newbuildings is shrinking. New orders are drastically reduced, and scrapping is accelerating.”
Scrapping featured in a number of responses to the survey. “New scrapping and recycling initiatives will have a major impact on the market, as will the Ballast Water Management (BWM) convention,” said one respondent, while another observed, “As more and more older ships go for scrapping, and businesses start to recover, freight rates should increase and the market will start to recover.”
Not everybody was convinced, however, that things were moving in the right direction. “More demolition and greater discipline in respect of newbuildings is required before the upturn can begin,” said one respondent, while another emphasised, “Even though scrapping levels are high, the number of newbuildings on the market will continue to result in oversupply and keep freight rates depressed.”
Charterers came in for criticism from respondents. One noted, “Charterers are simply taking advantage of the situation by pitting owners against each other in order to achieve lower than last-done rates, particularly in the case of older vessels.”
Source: Moore Stephens