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Moore Stephens shipping confidence survey holds at highest level in 3 & 1/2 years

The year seems to be ending on a high note with the latest Moore Stephens Shipping Confidence Survey noting that shipping confidence held steady at its highest rating in the past three-and-a-half years in the three months to end-November 2017.

“Confidence is at its highest level for three-and-a-half years, testament to the industry’s remarkable durability,” said Moore Stephens Shipping & Transport partner Richard Greiner.

Charterers were the most optimistic, with their confidence rating spiking to 7.7, the highest rating recorded for this category since the survey was launched in May 2008, from 4.7 in the previous survey in August.

The average confidence level expressed by respondents was unchanged from August at 6.2, while the rating for owners fell from 6.5 to 6.4,

“Charterers are leading the way in terms of improved confidence and appetite for new investment. There is optimism in the dry bulk trades, and evidence of continuing improved confidence in the gas sector. The Baltic Dry Index, meanwhile, has risen by over 50% in the past six months, and net sentiment in all three main tonnage categories remains positive,” said Greiner.

Confidence levels were down in Asia, from 6.4 to 5.7, and unchanged in Europe and North America, at 6.3 and 5.8 respectively.

Overall likelihood of making a major investment or significant development over the next 12 months was down from 5.4 to 5.3 however once again charterers’ confidence in this category rose from 4.0 to 6.2.

Investment expectations for owners and brokers were up from 5.8 to 5.9 and from 4.4 to 5.3 respectively, but down from 5.4 to 5.3 for managers. Asian respondents (down from 5.9 to 5.0) were also less confident in this regard, but in North America the rating was up from 4.9 to 5.4. In Europe, expectations held steady at 5.2.

Moore Stephens noted that although overall expectations of making major investments over the next 12 months were marginally down on the three-year high recorded in the previous survey, several respondents saw encouraging signs of recovery, and potential for further improvement, particularly in the dry bulk sector.

“Undeniably, things are a little better, but there is not such a significant improvement that we can break out the champagne and celebrate a recovery,” the shipping accounting firm quoted one respondent as saying.

Respondents also see finance costs rising, with 59% expecting this to rise over the coming year compared to 50% in the previous survey. This is the highest figure since October 2008. For the corresponding category, owners’ expectations were up from 48% to 54%, while the increase for charterers was from 67% to 83%, and for brokers from 42% to 60%.

Demand trends and freight rates continued to weigh on the minds of respondents. Despite a fall from 27% to 23%, demand trends continued to be the factor expected to influence performance most significantly over the coming 12 months followed by competition and finance costs, Moore Stephens said. 

According to one respondent: “Shipping continues to be volatile and unstable, with an oversupply of tonnage, and new finance continuing to pour in, while geopolitical issues and new regulations are causing disruption.”

The dry bulk sector players were the most wary about future rate expectations, with the number seeing higher rates falling six percentage points but still higher than everyone else on an absolute basis at 50%. The tanker market was a bit more sanguine, with those expecting higher freight rates over the next 12 months down by just one percentage point to 44%, while in the container ship sector, the numbers expecting higher rates dropped by four percentage points to 36%.

Net sentiment was positive in all the main tonnage categories. It was unchanged in the tanker market at +31, but down in the dry bulk market from +49 to +38, and in the container ship sector from +23 to +21.

“A slowdown in newbuilding activity has started to redress the imbalance in supply and demand, and that should be reflected in improved freight rates. There is an appetite for investment, and finance is available. The shipping recovery might not yet be fully under way, but 2017 may come to be regarded as the year when the downward spiral was halted,” concluded Greiner.

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