Moody’s Japan K.K. says the outlook for the global shipping industry over the next 12-18 months is stable.
“Moody’s-rated shipping companies should report aggregate year-over-year EBITDA growth of around 5%-7% over the next 12 to 18 months. Our expectation indicates a stable outlook for the industry over the same period,” says Mariko Semetko, a Moody’s Vice President and Senior Analyst.
“Despite weak freight rates, EBITDA growth will be supported by continued operating efficiencies and cost reductions; the latter we expect will be driven largely by low fuel prices,” adds Semetko.
Moody’s report says bunker prices should stay low in 2015 and rise only modestly in 2016, given the ongoing weakness in crude oil prices and the correlation between crude and bunker prices.
The report adds that while all four main shipping segments — dry bulk, crude oil tankers, product tankers and containers — carry stable outlooks, not all four will exhibit equal levels of supply-demand imbalance. Moody’s is more positive about the outlook for the tanker segment and least positive about the outlook for the dry bulk segment.
The demand is set to slightly outpace supply in the tanker segment, because historically low prices have boosted demand for tankers to be used as storage for oil. Stockpiling oil for strategic reserves and oil-trading companies storing oil in tankers have caused freight rates to rise, and Moody’s expects that tankers will see earnings growth in 2015 including for this reason.
By contrast, the supply growth for dry bulk ships will exceed demand growth in 2015-16, because of weaker macroeconomic conditions particularly in China. The oversupply situation will keep freight rates low over the next 12-18 months and constrain revenue and EBITDA growth for the dry bulk segment.
Moody’s report concludes by saying that downside risks for the industry as a whole remain high.