Overall confidence levels in all sectors of the shipping industry recovered to their highest level in two years in the three months ended February, according to the latest Shipping Confidence Survey from international accountant and shipping adviser Moore Stephens.
The survey found an improved expectation of freight rate increases over the next 12 months in all shipping sectors and greater likelihood of new investment in the industry.
In the container ship market, there was a 7 percentage point increase, to 34 percent, in the overall number of survey respondents who expect rates to go up. The levels of expectation that rates will go up were up across all categories of container sector respondents, most notably in the case of charterers (up 12 percentage points to 47 percent).
Meanwhile, 36 percent of shipowners (compared with 27 percent in the last survey, in November 2012) and 33 percent of managers (up 10 percent in the last survey) expect container ship rates to rise in the next 12 months. Geographically, expectations of improved rates were down in Asia (from 36 percent to 24 percent), but up in Europe (from 22 percent to 38 percent) and in North America (from 39 percent to 40 percent).
The average confidence level expressed by respondents in the shipping markets in which they operate was 5.8 on a scale of 1 (low) to 10 (high), compared with the figure of 5.6 recorded in the previous survey in November. The survey was launched in May 2008 with a confidence rating of 6.8.
A number of respondents felt there were positive signs that a recovery was on the way. One said, “Scrapping continues apace, and new orders have all but dried up. These are two of the main drivers for recovery, the third being demand, which will improve, with the result that we should see a measurable upturn by year-end.”
Another noted, “Demand trends for seaborne trade are generally positive, and tonnage reaching obsolescence due to age and regulation will exit the market. Finance is competitive where available, and, where it isn’t, owners and their ships will leave the market. Patience and strong cash-flow management are essential.”
In the opinion of one respondent, “This year will be crucial in determining who will be able to benefit from the upswing in the market when it happens. It will depend on the banks’ attitude toward bad debt and increased foreclosure, the increased competitiveness of Japanese shipyards, and the phasing out of uneconomical, old ship designs.”
The likelihood of respondents making a major investment or significant development during the next 12 months was up from the previous survey, on a scale of 1 to 10, from 5.4 to 5.5 – the highest level since May 2011. Owners (up from 5.7 to 5.9, the highest level since May 2011) and managers (up from 5.5 to the highest level for two years, 5.7) were more confident than in the previous survey. And although charterers recorded a fall from 6.1 to 5.7 in this regard, the percentage of charterers who assessed the likelihood of their making an investment at 7.0 out of 10.0 or higher was up by 2 percentage points to 46 percent. The number of owners who thought likewise was up, as well, from 44 percent to 47 percent.
One respondent noted, “Those who are able to purchase new designs of ships at competitive prices this year with delivery within the 2015 horizon should be well-positioned when the market turns. Newish ships based on old designs will very quickly become obsolete.”