"Good Time to Invest" as Shipping Confidence Highest in Two Years

The industry sees investment, rate increases in its future

Overall confidence levels in the shipping industry hit their highest point in two years in the three months ended February 2013, according to Moore Stephens' Shipping Confidence Survey, with shippers more likely than in past periods to anticipate freight rate increases and investment in the industry.

Respondents' confidence in the markets where they operate stood at 5.8 for the period on a scale of 1 to 10, up from 5.6 in November 2012.

In North America, confidence rose from 6.1 to 6.6, while in Europe it was up from 5.3 to 5.8, but Asia went the opposite way, dropping from 6.0 to 5.6.

"Another small increase in confidence is very good news," said Richard Greiner, shipping partner for Stephen Moore.

"Indeed, two successive quarters of improved confidence is in many ways more encouraging than one sizeable swing.

"It suggests that confidence is slowly building, indicating the start of a credible recovery."

Greiner said the tone of respondents' comments on the surveys also shifted, from focusing on broad market issues like economic problems in Europe to discussing plans for the future such as investment in fuel-efficient vessels.

Some companies, including Scorpio Tankers and Frontline 2012 have been making big investments in fuel-efficient vessels in recent months.

"Now is certainly a good time to invest, particularly for those who can identify a niche opportunity in a specific area, one for which there is growing demand and which is backed by a proper business plan," Greiner added.

"The indications are that the worst of the current shipping cycle could be over. But serious challenges lie ahead.

"Operating costs are going up, particularly fuel and manpower, and there is the added burden of increasing operational and environmental regulation."

Greiner said the industry must keep up scrapping in sectors with too much capacity to achieve profits.