News

08 Jul 2008

Confidence in the shipping market for the next twelve months remains unaffected by the global credit crunch, according to a latest survey on shipping confidence conducted by Moore Stephens. However, two-thirds of shipping interests expect finance costs to rise. On a scale of 1 to 10, the overall confidence shown in the market by those who responded to the survey was unchanged at 6.8, with owners and managers expressing the highest levels of confidence at 7.0 (marginally down on the previous survey) against the 6.3 recorded by charterers.
Some respondents acknowledged that the current financial crisis could affect world trade. But this was balanced by the expectation that continuing high demand from Asia and the Far East, in particular, would ensure that shipping would ride out the financial slump.
Meanwhile, a shortage of suitably qualified crew - which could ultimately lead to owners being forced to lay up vessels and default on mortgage repayments and the escalating cost of fuel impacting on the ability to invest in other areas, were recurring themes among respondents.
Demand trends and competition emerged as the factors deemed most likely to influence performance over the next twelve months. Operating costs, which were cited as the most significant factor in this category in the last survey, came in fourth, behind the cost of finance.
Comments included doubts about the industry’s ability to build sufficient numbers of new ships to meet demand, and the inability of freight rates to keep pace with rocketing price of oil.
Owners remained the most likely to make a major investment or significant development during the next twelve months, but their rating of 6.5 out of 10 (against an average overall score of 5.9) was half a point down on the previous survey. Ship managers returned a score of 6.0 in this category, an increase of 0.3 points.
There was a strong message from the survey that finance costs were likely to rise, with 66% of respondents expecting costs to be higher in twelve months - time than they are at present, as against 56% in the previous survey.
There was a sharp increase - 47% - in the number of brokers anticipating a higher cost of borrowing, while 70% of managers, and 59% of owners, shared the same expectation. Europe - the largest group overall – was the most pessimistic in this regard, with 68 per cent of respondents from that region anticipating an increase in finance costs.
Opinions about the direction in which freight rates in the tanker market were likely to move over the next twelve months showed some sharp variations, with 64 % of charterers expecting rates to increase, and only 31% of owners sharing that view. Similarly, 37% of owners who responded expected tanker rates to be lower, compared to just 9 per cent of charterers.
Finally, charterers (50%) continued to lead the way in expecting higher rates in the container ship trades over the next twelve months, while only 26% of owners, and 28% of managers, were of the same opinion.