The overall confidence levels in the global shipping industry have risen slightly in the three months to May this year but still remain low, according to the latest Shipping Confidence Survey from international accountant and shipping adviser Moore Stephens.
In May, the average confidence level expressed by respondents in the markets in which they operate was 5.1 on a scale of 1 (low) to 10 (high). While this is a slight improvement from 5 recorded in February this year, it is still the second lowest rating in the life of the survey, launched in May 2008.
On the part of shipowners, confidence level was markedly up to 5.7 from 4.8, while charterers were also slightly more optimistic with rating up to 4 from 3.9. Confidence among managers and brokers, however, was down to 5.1 from 5.5 and 4.3 from 5.1, respectively.
Many respondents commented that economic and geopolitical uncertainty was of utmost concern, along with the lingering problems of overcapacity and lack of scrapping activities.
Richard Greiner, Moore Stephens partner, Shipping Industry Group, said: “If there is one thing certain in the current shipping market, it is the level of uncertainty which is pervading all sectors at the moment. Over the three months covered by our latest survey, that uncertainty has embraced a variety of industry-specific issues, as well as geopolitical factors ranging from the UK referendum on EU membership to the comparative slowdown in the Chinese economy.
“Against such a background, any increase in shipping confidence – however small – is welcome,” he said.
“Many of our respondents continue to express serious misgivings about the extent of overtonnaging, and about the inadequacy of current levels of demolition activity. One informed estimate recently put world shipbuilding overcapacity at 50%. Other estimates, meanwhile, put first quarter 2016 demolition levels at roughly 50% more than in the same period the previous year.
“Where ship recycling is concerned, however, 50% of not very much is not enough. As one respondent to our survey noted, ‘We have still to see 15-year-old ships being sent to scrapyards in any meaningful manner’,” Greiner commented.
There is little cheer in the freight markets, with the dry bulk sector being described as “dire” and the container shipping market is witnessing some of the lowest rates in history.
Tanker shipping is faring better by comparison, but its fortunes over the coming 12 months will be closely linked to oil price movements, Greiner noted.
“The mood of our respondents was not universally downbeat, however. A number continued to emphasise the fact that other methods of transportation are invariably not a viable alternative to shipping, while others stressed that innovative operators will always find a way to succeed, including accessing the finance needed to do so,” he said.
“And while some complained about the difficulty of securing or maintaining finance, 45% of owners rated the possibility of making a new investment over the coming 12 months at 7 out of 10 or higher.”
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