Moore Stephens: Shipping Confidence Continues to Decline, but Outlook is "Exciting"

Overtonnage and excess shipbuilding are cited as points of concern.

Moore Stephens' latest survey reveals that confidence in the shipping industry has dropped to an average of 5.6 on a 1-10 scale compared to 5.9 recorded in August of 2015 and 6.8 in May of 2008, media.

Overtonnage and excess shipbuilding were cited as the main reasons for the decline, which was consistent amongst the survey categories of charterers, managers, brokers (whose confidence level was the lowest at 4.6), and owners.

Richard Greiner, shipping partner for Moore Stephens, remarked, "The tanker market is producing comparatively good earnings at the moment, but its fortunes are too closely linked to the price of oil for anybody to accurately predict how long this will last.

"Expectations of improved rates over the next 12 months in the three main tonnage categories covered by the survey are down; in the case of the dry bulk sector, such expectations are at their lowest since August 2012, while in the container ship market one has to go back to October 2008 to find a lower figure."

Elsewhere in the survey, participants' likelihood of making a major investment or significant development over the next year declined from 5.3 to 5.2; 47 percent of them expected finance costs to increase over the next year, down a percentage point from Moore Stephens' last survey.

As for factors most likely to influence performance over the next 12 months, respondents cited demand trends, competition, and port congestion as the top three.

One respondent noted the impact of ever increasing regulation impacting the industry, saying, "Excessive regulation makes control of costs even more difficult."

"Furthermore, what is the point of creating rules when international authorities cannot agree how to apply them, such as in the case of ballast water management?"

Greiner stated that global unrest in general "does nothing to help confidence in industries such as shipping," but he tried to balance the survey's negatives by adding, "It is by no means all bad news: operating costs fell in both 2013 and 2014, which is evidence of the application of a measure of control which shipping has not been accustomed to seeing in recent years.

"Shipping remains a good business to be in, its continued existence assured by its singular capabilities. The outlook remains volatile, but exciting."

Moore Stephens last month said vessel operating costs are expected to rise by 3.1 percent in 2016, along with hull and machinery insurance rising by 1.9 percent.