Moody's Sees Negative Shipping Outlook

Moody's Investors Service set a negative outlook for the shipping industry over the next 12 to 18 months on Tuesday, saying the business from container carriers to bulk operators is facing overcapacity.

The dry bulk sector will likely be hit hardest this year because the segment’s order book equals nearly half of the current capacity, with about 80 percent of the vessels to be delivered over the next two years, Marco Vetulli, a senior credit officer in Moody’s corporate finance group, said in a statement.

Despite the increase in oil demand in the past year and a half, the tanker segment will remain challenged this year because a sustained recovery over the second half of 2012, or even 2013, is unlikely.

Supply and demand is better balanced in the container segment although still fragile, said Moody’s. Although major container carrier’s reported acceptable financial results in the first quarter of 2011, Moody’s expects earnings to weaken because of softening demand and growing overcapacity as more vessels are delivered.

Moody’s said the supply chain disruptions caused by the earthquake and tsunami in Japan in March will be short-lived and volume will recover to pre-earthquake levels in the fourth quarter.

Contact Mark Szakonyi at mszakonyi@joc.com.