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Shipping not for the faint-hearted in 2016 says Moore Stephens

Shipping not for the faint-hearted in 2016 says Moore Stephens
Shipping will remain “volatile and uncertain” in 2016 thanks to unpredictable Chinese demand and a complex geopolitical picture elsewhere, according to shipping adviser Moore Stephens.

"The Baltic Dry Index dropped to an all-time low in December last year, and has fallen still further this month. Most people blamed this on China for not consuming as much of anything as it did previously,” said Moore Stephens shipping partner Richard Greiner.

“The same is true of the container ship sector, where reducing capacity is seen as the best way to drive up rates,” he continued. “CMA CGM's move to buy NOL, meanwhile, although subject to regulatory approval, is an indication of further consolidation. It would be no surprise to see more still in 2016.”

Geopolitics “should not be underestimated” as a factor in industry decisions over the next 12 months, Greiner said, adding that discussions about a British exit from the EU would “add spice to the pot.” Other factors included the IMO’s controversial Ballast Water Management convention and cybercrime. “Interest in refinancing, as a means of getting cash out of the business, is likely to increase, as are calls for accelerated ship recycling and a cap on newbuildings,” he continued.

“By comparison, the tanker markets enjoyed a stronger year in 2015, not least because of falling oil prices. In contrast, this has presented major challenges in the offshore maritime space. Some experts are predicting a slide to $20 a barrel in 2016.”

Nevertheless, Greiner maintained, 2016 would be “a good time to invest” for those with access to finance and “a credible business plan, preferably one with the badge of green approval.”