Shipping confidence levels have recovered slightly from their lowest level for over four years
According to the latest quarterly shipping confidence survey from international accountant and shipping adviser, Moore Stephens, confidence levels have recovered slightly from their lowest level for over four years.
It says that the small upturn in confidence appears to be related, among other things, to an increase in scrapping and the beginnings of a gradual improvement in the overtonnaging crisis which has dogged the industry for several years.
Scrapping featured in a number of responses to the survey. Namely that new scrapping and recycling initiatives will have a major impact on the market, as will the Ballast Water Management (BWM) convention. The industry hopes that as more and more older ships go for scrapping, and businesses start to recover, freight rates should increase and the market should start to recover.
Not everybody was convinced, however, that things are 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 that:”Even though scrapping levels are high, the number of newbuildings on the market will continue to result in oversupply and keep freight rates depressed.”
Elsewhere, respondents generally remained concerned about the continuing worldwide economic downturn and, in particular, the financial difficulties of the eurozone and the problem of the availability of third-party finance.
The likelihood of respondents making a major investment or significant development over the next twelve months was up on the previous survey, on a scale of 1 to 10, from 5.3 to 5.4 – the highest level since May 2011.
Richard Greiner, Moore Stephens shipping partner, said: “This increased willingness to invest is due in part to what many see as the first signs of a correction in the industry’s tonnage overcapacity problems. Scrapping activity has increased, although there is simply not enough demolition capacity in the world for this to be a solution on its own.”
The going is still going to be tough though. He added: “The inescapable conclusion is that those companies that emerge intact and profitable from one of the darkest periods in recent shipping memory will be among the leanest and greenest the industry has ever seen.”
Source: The Motorship
