Peter T. Leach, Senior Editor | Mar 26, 2012 10:34AM EDT
Overall confidence levels in the shipping industry increased slightly in the three months ended February 2012, reaching its highest level since May 2011, according to the latest Shipping Confidence Survey from international accountant and shipping adviser Moore Stephens.
This is the third successive quarter in which there has been a small uptick in confidence. Rates are expected to increase over the coming year in the container, bulk and tanker sectors covered by the survey.
In February 2012, the average confidence level expressed by respondents in the markets in which they operate was 5.5 on a scale of 1 (low) to 10 (high). This is marginally up on the figure of 5.4 recorded in the previous survey in November 2011.
It compares to the 5.8 recorded a year earlier, in February 2011, and to the 5.9 figure posted in February 2010. The survey was launched in May 2008 with a confidence rating of 6.8.
In the container ship market, 31 percent of respondents overall expected rates to increase over the next 12 months, compared to 23 percent last time. Charterers led the way, with a 13 percentage-point increase to 26 percent, which nevertheless still left them trailing managers (up from 23 percent to 30 percent), and owners, up 5 percentage-points to 28 percent.
These figures, however, were well down from last year’s numbers. In February 2011, 56 percent of owners, 47 percent of managers, and 40 percent of charterers said they thought containers ship rates were likely to increase.
The number of respondents expecting to make a major new investment over the next 12 months fell to its lowest figure in three years, despite a fall in the number of those anticipating an increase in finance costs.
Confidence was up in Europe, from 5.1 to 5.3, although the region remained the least optimistic of all geographic sectors covered by the survey. Meanwhile, confidence was down in Asia, from 5.8 to 5.7, and in both North America and Latin America (from 5.8 to 5.6 and from 6.4 to 5.7 respectively).
Although confidence levels improved marginally over the three-month period covered by the survey, a number of respondents expressed concern about the current state of the industry. “There are too many ships,” said one. “Freight levels cannot go much lower and we will be bumping along the bottom for a while. Apart from owners causing their own malaise by over-ordering ships, structural changes - such as China subsidizing its own maritime industry - will keep a lid on developments in certain sectors.”
A number of respondents counselled patience. “Some market sectors are very depressed,” said one, “but a re-balancing is already under way. We have to be patient. It will be at least three-to-five years until margins become reasonable.”
A number of respondents, however, saw reasons for greater optimism. “We firmly believe that the markets will pick up over the next 12 months, although the gains will be quite low,” said one, while another insisted, “We think fourth-quarter 2012 will signal a turning-point for the industry.”
In common with previous surveys, a high percentage of respondents expressed concern about vessel overcapacity. One remarked, “It is unbelievable that some owners are still ordering new ships, given the current economic problems and the general perception that rates will remain low when the vessels now on order eventually enter service.”
Contact Peter T. Leach at pleach@joc.com.