Shipping confidence hits two-and-a-half year low
Respondents to the survey identified overtonnaging as the biggest factor behind the fall in confidence, but also expressed concern about the effect on the industry of lower oil prices and the growth of investment by financiers from outside shipping.
In February 2015, the average confidence level expressed by respondents in the markets in which they operate was 5.5 on a scale of 1 (low) to 10 (high), down from the 5.7 recorded in November 2014. This is the lowest figure since August 2012, and compares to the record high of 6.8 when the survey was launched in May 2008.
Charterers recorded the biggest fall in confidence, down to 3.9 from 5.4 in the previous survey. Confidence on the part of owners was also down (from 5.5 to 5.4), while that expressed by managers was slightly up, from 6.1 to 6.2. Confidence in the broking sector was unchanged at 5.0. Geographically, confidence was down in all main areas covered the survey.
A surplus of tonnage, particularly in the dry bulk trades, dominated the comments of those who responded to the survey. Falling oil prices were another recurring theme among respondents. A number of respondents expressed concern about the effect on the markets of the entry into the industry of new money from non-shipping investors.
The survey revealed 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 5.3 to 5.1, the lowest figure since February 2012, although managers were more confident in this regard than they were three months previously.
The number of respondents who expected finance costs to increase over the next twelve months was down by eight percentage points to 32 percent, the lowest figure in the seven-year life of the survey.
Demand trends, competition and tonnage supply featured as the top three factors cited by respondents as those likely to influence performance most significantly over the coming twelve months. The numbers for demand trends were down on last time from 25 percent to 24 percent, while those for competition were up one percentage point to 21 percent.
Tonnage supply, up by one percentage point to 14 percent, displaced finance costs in third place this time. Fourth place was shared by finance costs (down by 2 percentage points to 12 percent) and operating costs, up by 2 percentage points. Meanwhile, fuel costs were unchanged at 7 percent, unsurprisingly the lowest figure recorded in this category since November 2010.
Turning to the freight markets, there was a fall in the number of respondents anticipating improved rates in the tanker sector over the next twelve months, but increased expectation of higher rates in the dry bulk and container ship trades.
Overall net sentiment, based on the difference between the number of respondents who expected rates to improve and the number who thought they would deteriorate, was positive in all three main tonnage categories covered by the survey. ■