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Shipping confidence hits new record low in Moore Stephens survey

Shipping confidence hits new record low in Moore Stephens survey
Shipping confidence has hit fresh lows in the latest Moore Stephens survey, reaching 5.0 to of 10 below the then-record lows of 5.3 in May 2015.

In another all-time-low, charterer confidence fell to 3.9, the weakest confidence rating by any category of respondent in the history of the survey, which started in 2008.

Excepting brokers, up from 4.6 to 5.1, confidence was down on the last survey in other categories too, from 5.7 to 4.8 for owners, 5.8 to 5.5 for managers.

Similarly, confidence was down geographically, to 4.4 from 6.0 in Asia, 5.1 from 5.4 in Europe, and 4.7 from 5.7 in North America.

The outlook for tankers reflected much of recent market sentiment with a 16% increase in the number of respondents anticipating lower freight rates in the tanker markets.

Some 31% of respondents predicted crude oil prices would be between $30 and $39 per barrel in a years’ time, while 26% put the figure at between $40 and $49. 10% of respondents thought the price would fall between $20 and $29. “It would be no surprise if crude tops $50 in the next 12 months, but anything significantly above that is unlikely,” said one reply.

“Tankers should be able to benefit in 2016 from the lack of market consensus over oil price movements, with longer-term decisions delayed as operators search for direction.”

Responses in dry-bulk, as might have been expected, were bleak. One respondent said: “No dry bulk business makes any remote sense. There are too many players, too many operators, and too many vessels chasing too few cargoes. Most fixtures are concluded merely to keep the banks happy in the belief that some tiny amount of cashflow is coming in.”

Another noted: “Dry bulk is simply at the bottom of the bottom, and actually a little lower than that.”

Respondents expressed concern about overtonnaging, a common theme throughout the history of the survey. One commented that there were “no chance of freight levels improving”.

They continued: “Newbuilding deliveries for 2016 will increase the total fleet by 10.5%, 7% of the current fleet is older than 20 years, and cargo volumes in 2015 were just 4.5% higher than in 2014, so the expected available fleet per metric ton of dry cargo available will be higher at the end of 2016 than it is now.”

“Increased scrapping may help achieve equilibrium in the dry bulk sector sooner rather than later,” said another, but yet another argued: “Low scrapping prices provide little motivation for owners to demolish ships.”

Moore Stephens Partner, Shipping Industry Group, Richard Greiner, called the results “disappointing and unsurprising in equal measure.”

“When the Baltic Dry Index drops to an all-time low it is a real indication of the problems facing the shipping industry,” Greiner continued. “The BDI doesn’t lie, and any doubts about the extent of those problems would have been dispelled over the past three months when reports of the fall in the BDI started to appear in the mass media, which generally carries only bad news insofar as it impacts the shipping industry.

“Most recently, however, there is better news, with the BDI starting to move upwards once more, gaining over 100 points within six weeks of plumbing the depths. Moreover, there is a reasonable expectation that the approaching peak harvest season will bolster demand for ships to carry grain and other commodities on international trade routes. This should boost the BDI further and, while shrinking demand for raw materials from China will continue to have an effect, the world will always need shipping to move its trade staples.”