Overall confidence levels in the shipping industry fell slightly during the three months to August 2014, according to Moore Stephens’ latest Shipping Confidence Survey.
The confidence is, however, still higher than at the corresponding period twelve months ago, and confidence among charterers actually reached a six-year high, the survey shows.
“The amount of anticipated significant new investment over the next twelve months was down over the three-month period, as were levels of expectation with regard to improved freight rates in the dry bulk and container ship sectors. Once again, the dominating concern among respondents was the perceived adverse effect on the market of an excessive amount of tonnage,” Moore Stephens said.
In August 2014, the average confidence level expressed by respondents in the markets in which they operate was 6.1 on a scale of 1 (low) to 10 (high), down from the 6.3 recorded in May 2014. This compares to the 5.9 recorded in August 2013, and to the record high of 6.8 when the survey was launched in May 2008.
According to the survey, charterers expressed a significant increase in confidence this time, up from 6.1 to 6.7, the highest figure recorded by this category of respondent in the life of the survey. Owners (up from 6.1 to 6.2) were also more confident.
But confidence on the part of managers and brokers was down, from 6.5 to 6.2 and from 6.0 to 5.3, respectively. The biggest fall in confidence was in fact that expressed by uncategorised respondents (down from 6.7 to 5.9).
A number of respondents referred to the adverse effect which political and economic developments are having on the market.
“The shipping markets are still unpredictable, and much will depend on political and economic developments between certain nations and on the easing or intensifying of economic embargoes,” a respondent said.
Moore Stephens’ Shipping Partner, Richard Greiner, said: “The slight decrease in confidence recorded over the three-month period covered by the survey coincides with a deterioration in the political situation in areas of the Middle East and Ukraine. Shipping operates on a global stage, and must inevitably be affected by international events.”
“We had been anticipating a better year in 2014,” said one respondent, “but that has not materialised to date, so we now look to 2015, when we anticipate a better year, with an improvement between supply and demand in terms of tonnage.”
Despite evidence to suggest that measures to reduce overtonnaging in the industry are meeting with some success, a number of respondents warned that there were still too many ships – both in service and on order – for the cargoes available.
The results indicated that the likelihood of respondents making a major investment or significant development over the next twelve months was down on the previous survey, on a scale of 1 to 10, from 5.8 to 5.4, the lowest figure recorded in this respect since November 2012.
The figures for all categories of respondent were down, most notably in the case of charterers, who rated the prospect of new investment at just 5.5, as opposed to 6.4 three months ago. Managers’ expectations, meanwhile, were down from 6.2 to 5.6, while owners recorded a drop from 5.8 to 5.6.
Geographically, expectation levels of major investments were down in Asia, from 5.9 to 5.2 (the lowest figure since May 2012), in Europe, from 5.7 to 5.4, and from 5.9 to 5.6 in North America, where just 22 percent of respondents rated the likelihood of making a new investment over the next twelve months at 7.0 out of 10.0 or higher, as opposed to 62 percent in the previous survey.
Demand trends, competition and finance costs, in that order, once again featured as the top three factors cited by respondents overall as those likely to influence performance most significantly over the coming twelve months.
Greiner added: “Overall, confidence in shipping is higher than it was twelve months ago. It continues to attract investors both from within and outside the industry. Moreover, both charterers and owners, the prime movers who make the industry go round, are more confident now than they were in the previous survey. The peaks reached by the freight markets in the mid-2000s may not be achievable for the foreseeable future, but today’s industry has moved out of foothill territory and has reason to be looking up, rather than down.”