Overall confidence levels in the shipping industry fell in the three months to August 2012 to their lowest level for four years, according to the latest survey from international accountant and shipping adviser Moore Stephens.
The fall, to the lowest figure recorded since the survey was launched in May 2008, comes after three successive quarters of improved confidence. Chief among the concerns raised by respondents to the survey were the glut of newbuildings coming onto the market and continuing uncertainty about the global economy.
In August 2012, the average confidence level expressed by respondents in the markets in which they operate was 5.3 on a scale of 1 (low) to 10 (high), compared with the figure of 5.7 recorded in the previous survey in May 2012, and identical to the figure posted one year previously, in August 2011. The survey was launched in May 2008 with a confidence rating of 6.8.
Charterers were the only category of respondent to report an increase in confidence over the three-month period. Having been the least confident of all categories of respondent in the previous survey, their confidence rating this time of 5.7 (compared with 5.0 in May 2012) was second only to the 5.9 recorded by managers, which itself was down from 6.0 last time.
Owners’ confidence was down from 5.6 to 5.1, the lowest rating in the life of the survey for this category of respondent. Brokers also plumbed their all-time low in the survey ratings, with confidence levels down from 5.2 to 5.0 this time.
Geographically, confidence in Asia hit a new survey low of 5.4 (down from 5.7 last time), while in Europe it was down from 5.6 to 5.2.
The feelings of large numbers of respondents were succinctly captured by the comments of one in particular, who said: “Supply trends are still very negative. Banks are increasingly reluctant to put out any money, let alone new money, except in very specific sectors. The economic outlook, particularly in Europe, is dismal, while China looks increasingly likely to suffer a hard landing. Let’s hope that the darkest hour really is just before the dawn.”
Overtonnaging was uppermost in the minds of many respondents.
One said: “More owners are now tempted to order new ships as building prices will be at their lowest level for many years. Shipyards and governments will do everything they can to prevent the closure of yards, which will create very interesting special financing packages aimed at getting owners to order new ships. So the market will be flooded with more new vessels, extending the time it will take for the industry to recover.”
Other respondents, however, saw potential advantages in the current situation, with one predicting, “Security held in long-term contracts, together with opportunities to benefit from lower newbuilding costs and the exploitation of new government regulations, makes for a healthy outlook
In the containership market, there was a 2 percentage point fall overall, to 32%, in the numbers expecting rates to go up.
In the previous survey, the number of respondents anticipating higher rates over the coming year was up in all categories of respondent. This time, it was down in all categories, with the exception of owners and charterers.
Moore Stephens shipping partner Richard Greiner said: “The fall in confidence recorded in our latest survey is clearly a disappointment. But it cannot really be termed a surprise. In some respects, shipping has been bucking the trend for the past twelve months, exhibiting increased confidence despite the political and financial woes in Europe and elsewhere, and the problems of overtonnaging and falling rates.”
The fall, to the lowest figure recorded since the survey was launched in May 2008, comes after three successive quarters of improved confidence. Chief among the concerns raised by respondents to the survey were the glut of newbuildings coming onto the market and continuing uncertainty about the global economy.
In August 2012, the average confidence level expressed by respondents in the markets in which they operate was 5.3 on a scale of 1 (low) to 10 (high), compared with the figure of 5.7 recorded in the previous survey in May 2012, and identical to the figure posted one year previously, in August 2011. The survey was launched in May 2008 with a confidence rating of 6.8.
Charterers were the only category of respondent to report an increase in confidence over the three-month period. Having been the least confident of all categories of respondent in the previous survey, their confidence rating this time of 5.7 (compared with 5.0 in May 2012) was second only to the 5.9 recorded by managers, which itself was down from 6.0 last time.
Owners’ confidence was down from 5.6 to 5.1, the lowest rating in the life of the survey for this category of respondent. Brokers also plumbed their all-time low in the survey ratings, with confidence levels down from 5.2 to 5.0 this time.
Geographically, confidence in Asia hit a new survey low of 5.4 (down from 5.7 last time), while in Europe it was down from 5.6 to 5.2.
The feelings of large numbers of respondents were succinctly captured by the comments of one in particular, who said: “Supply trends are still very negative. Banks are increasingly reluctant to put out any money, let alone new money, except in very specific sectors. The economic outlook, particularly in Europe, is dismal, while China looks increasingly likely to suffer a hard landing. Let’s hope that the darkest hour really is just before the dawn.”
Overtonnaging was uppermost in the minds of many respondents.
One said: “More owners are now tempted to order new ships as building prices will be at their lowest level for many years. Shipyards and governments will do everything they can to prevent the closure of yards, which will create very interesting special financing packages aimed at getting owners to order new ships. So the market will be flooded with more new vessels, extending the time it will take for the industry to recover.”
Other respondents, however, saw potential advantages in the current situation, with one predicting, “Security held in long-term contracts, together with opportunities to benefit from lower newbuilding costs and the exploitation of new government regulations, makes for a healthy outlook
In the containership market, there was a 2 percentage point fall overall, to 32%, in the numbers expecting rates to go up.
In the previous survey, the number of respondents anticipating higher rates over the coming year was up in all categories of respondent. This time, it was down in all categories, with the exception of owners and charterers.
Moore Stephens shipping partner Richard Greiner said: “The fall in confidence recorded in our latest survey is clearly a disappointment. But it cannot really be termed a surprise. In some respects, shipping has been bucking the trend for the past twelve months, exhibiting increased confidence despite the political and financial woes in Europe and elsewhere, and the problems of overtonnaging and falling rates.”
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