Shipping industry fortunes are set to improve next year, though the industry needs to meet a number of challenges.
The shipping industry’s fortunes should be noticeably improved by 2015 according to international accountant and shipping adviser Moore Stephens.
But the company warns that the prospects for recovery may still be fragile if the industry fails to meet a number of challenges, including tighter regulation and increased operating costs.
“The shipping industry can afford to be a little more bullish than previously in its aspirations for 2014,” said Moore Stephens shipping partner Richard Greiner.
“Shipping is in a different space to that which it occupied a year ago. Confidence rose to a three-year high over the course of 2013.
Good things are predicted for freight rates in 2014, more companies are starting to consider new investment and economic and political issues with the potential to hurt shipping are deemed less severe than 12 months previously.”
Moore Stephens predicts that over the next 12 months, more shipping money will be raised in the public and private equity markets and supply and demand levels should come closer into alignment.
As a result, freight rates are likely to rise and with them, vessel values with increased levels of demolition required to offset new tonnage.
Mr Greiner pointed out that China is already offering subsidies to shipping companies to scrap vessels before their operational expiry date and to replace them with new ships which are eco-friendly and which fly the Chinese flag.
He warned, however, that all the positive indicators remain somewhat fragile.
“Operating costs are expected to go up in 2014.
Shipping cannot operate without fuel and skilled manpower.
Meanwhile, increased regulation of crew welfare, fuel quality and ballast water management are big-ticket items,” he said.
“Environmental regulation is self-perpetuating, witness the news that IMO is to debate plans for ship owners to compile fuel-consumption data to support steps to create carbon dioxide reduction regulations.”
