Overtonnage and ECAs Drag Shipping Confidence to Two-Year Low

Charterers and shipowners saw the greatest declines in confidence.

Confidence among the shipping industry has dropped to its lowest point in two years, spurred by ongoing uncertainty over markets, upcoming sulfur regulations, and overtonnage, according to Consultant network Moore Stephens in its latest shipping survey. 

The results, which ranks confidence on a scale from 1-10, showed that overall levels dropped to 5.7 from 6.1 in the three months leading to November, with charterers and shipowners indicating the greatest declines to 5.4 and 5.5, respectively. 

Asia and Europe in particular have been experiencing the most uncertainty, while North America has been holding steady. 

"The main reason for this may well be the one advanced by the respondent to our survey who complained of 'too much competition, too many ships, and not enough cargo,'" said Moore Stephens shipping partner Richard Greiner.

"Add to that the adverse effect which those three factors have on freight rates, and you have some measure of the problems currently facing the industry."

Freight rates in recent times have gone through the floor, eating into profits.

Meanwhile, upcoming 2015 Emission Control Area (ECA) sulfur limits have also sent companies scrambling towards costly compliance measures. 

Moore Stephens also noted that the industry responses had been collected prior to the announcement of OW Bunker's alleged fraud and following bankruptcy.

One thread of positivity however, was the shared hope among many respondents that global markets would pick up by mid-2015.

"Shipping is still attracting investment," said Greiner.

"It may not be the type of investment which die-hard traditionalists would prefer, but private equity investors are not known for throwing their money away on lost causes."

Confidence levels began dipping this year between February and May, despite starting 2014 on a high.