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Moody reveals negative outlook for shipping sectors

Moody reveals negative outlook for shipping sectors

Kuala Lumpur: Moody's Investors Service latest report anticipates a downturn for dry bulk, tankers, and liners operating in the Asia Pacific over the next 12-18 months. The report has attributed its pessimistic outlook to the global economic downturn, tightening bank credit, increased volatility in currencies and financial markets, which it believes have aggravated the already surplus shipping capacity. This situation is likely to worsen with the impact of a sharp drop-off in demand for shipments of containerised goods, oil, and bulk commodities, Bernama quotes the report as saying.

"Such adverse developments may last for an extended period and are the primary drivers for the negative outlook," Peter Choy, the report's lead author and a senior credit officer at Moody's is quoted as saying. "Although the credit crisis may result in the cancellation of some new building orders, a correction in the excess supply from a sizeable order book will take a long time."

The report has particularly noted the negative effect on the dry-bulk sector, which has suffered as a consequence of suspension of trade credit, unstable operating costs, low freight rates and declining demand for commodities, which have manifested in a drop in the BDI.

However, analysts at Moody's expect companies "such as MISC, BW Shipping, NYK, and MOL," to benefit from "long-term agreements on many vessels, adequate liquidity through good access to banks, diversified trade and types of vessels."  [17/11/08]