Confidence in the shipping industry has risen in the last three months despite ongoing geopolitical uncertainty, according to the latest Shipping Confidence Survey by Moore Stephens/BDO. The average confidence level rose to 6.2 out of maximum score of 10.0 in Q1 2019 compared to 6.0 in Q4 2018.
BDO has completed its merger with Moore Stephens LLP, creating the largest UK accountancy and business advisory firm focused on mid-sized, entrepreneurially-spirited businesses. As the company reported, the merged firm will operate under the BDO brand and as part of BDO’s international network, which has 80,000 people and revenues of $9 billion across 162 countries.
Moore Stephens published its annual report for owner managed business, saying that due to continued uncertainty, owner managed business confidence has decreased for 2019. This shows a declining confidence for 2019, as well as the prospects for business performance in the year to come. The main reason for the reduction in confidence is Brexit.
Current and upcoming regulations, indicate that the industry is on the right path. However, new funds are necessary, as going green will cost, the consultancy firm highlighted. 2019 will be crucial and the sector will have a better picture of whether the necessary drydocking capacity exists.
Vessel operating costs in the shipping industry are expected to increase by 2.7% in 2018 and by 3.1% in 2019, according to Moore Stephens’s latest survey, ‘Future Operating Costs Survey’. Drydocking is the cost category likely to increase most significantly in both 2018 and 2019, followed by repairs and maintenance.
The new lease accounting standard, IFRS 16 Leases, comes into effect on or after 1 January 2019, and shipping companies need to make sure they have assessed its implications, Moore Stephens advised. IFRS 16 has the biggest impact on lessees, for whom it removes the distinction between an operating and a finance lease.
Total ship operating costs fell by 1.3% in 2017, which compares with the 1.1% average fall in costs recorded for 2016, says Moore Stephens. For the third successive year, all categories of expenditure in 2017 were down on those for the previous 12-month period, mostly for insurance costs and stores.
Shipping confidence decreased very slightly in the three months to end-August 2018, according to Moore Stephens’ latest Confidence Survey. The respondents expressed an average confidence level reduced to 6.3 out of a maximum possible score of 10.0.
Respondents to the annual Shipping Risk Survey by Moore Stephens rated the extent to which enterprise and business risk management is contributing to the success of their organisation at an average 5.9 out of a possible score of 10.0, compared to 6.8 in the 2017 survey.
According to Moore Stephens’ latest Confidence Survey, shipping confidence held steady from March until the end of May 2018. The average confidence level remained the same, at the four-year high of 6.4 out of 10.0 recorded in February 2018. Owners’ confidence also remained high at 6.6, while managers’ confidence increased from 6.4 to 6.7.
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