Shipping confidence has not changed in the three months to end-February 2017 despite industry and political pressures, according to the latest Shipping Confidence Survey by Moore Stephens. Respondents’ average confidence level held constant from the previous survey in November 2016 at 5.6 out of 10.0 - the highest rating since August 2015.
In general, respondents have expressed concerns on intense competition, overtonnaging and geopolitical uncertainty. 2017 is foreseen as a year of retrenchment rather than improvement.
Owners were more optimistic than in November 2016, with an improved confidence level of 5.6 from 5.4. However, confidence on the part of the other categories of respondent dropped. The confidence level of charterers was down from its all-time survey high of 6.8 to 5.9, of managers from 6.4 to 6.0, and of brokers from 5.6 to 4.6.
Geographically, confidence in was up in Europe and North America, from 5.4 to 5.5 and 5.9 to 6.1
respectively, but down from 5.7 to 5.6 in Asia.
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The likelihood of respondents making a major investment or significant development over the next 12 months was unchanged for the fourth successive quarter, with a rating of 4.9 on a scale of 1 to 10. The confidence of managers in this respect was up from 5.2 to 5.6, the highest since August 2015. Owners also recorded a small improvement, from 5.0 to 5.1. Charterers and brokers, however, were less confident in this regard than they were three months ago, from 6.4 to 5.8 and 3.8 to 3.4 respectively.
The number of respondents who expected finance costs to increase over the next 12 months reached its highest level since November 2011 at 54%. There was a decrease in the numbers of owners from 58% to 57% and brokers from 53% to 41%. In contrast, 61% of managers are expecting increases, up from 52% in December 2016.
Demand trends overtook competition as the factor expected to influence performance most significantly over the next 12 months, followed by finance costs and tonnage supply.
There was an eight percentage point drop in the number of respondents anticipating improved rates in the tanker market over the next 12 months. The number of respondents anticipating lower tanker rates increased to 28% as opposed to 24% in the previous survey. Meanwhile, there was an increased expectation of higher rates in the dry bulk and container ship trades.
The net sentiment in the tanker markets was -3, as opposed to +33 in the dry bulk markets and +13 in the container ship trades.
Respondents were asked in a stand-alone question to identify the price range they expected crude oil (per-barrel) to be in 12 months’ time. Majority of the respondents predicted a range of $50-$59, identified by 38% of respondents, as opposed to 19% in the February 2016 survey. Only 1% estimated crude oil prices to be in the $30-$39 range, as opposed to 31% in February 2016.
Richard Greiner, Moore Stephens partner, shipping and transport, felt that the survey results were encouraging given the continuing political uncertainty in the US and Europe: “Elsewhere, the issues facing the industry include an over-supply of ships and insufficient demolition. Freight markets are dragging along the bottom in many sectors, with net rate sentiment in the tanker market being particularly low. Add to this the expectation of higher ship finance costs, the mounting costs of regulation, the threat of cyber-crime and projected increases in operating costs and it is evident that shipping will not be a picnic for the foreseeable future.”