The outlook for the global shipping industry is stable, reflecting expectations for low single-digit percentage aggregate year-over-year growth for its rated shipping companies during the coming 12-18 months, according to Moody’s Ratings Japan.
Mariko Semetko, a Moody's Vice President and Senior Analyst, said: “This growth rate is lower than the mid-to-high single-digit range we expected earlier in the year because some companies have reduced their demand expectations and freight rates remain low amid oversupply.
“The growth will be driven primarily by continued cost reductions stemming largely from weak oil prices, which reduce shipping companies' fuel costs and keep demand high for oil tankers.”
Moody's also expects that the prices for bunker fuel will remain low over the outlook period, in line with expectations for crude oil prices to which bunker fuel prices are correlated.
Fuel is a significant expense for shipping companies and low fuel costs therefore facilitate EBITDA growth, particularly for containership operators.
However, while the outlook for each of the three main shipping segments — dry bulk, containerships and tankers — is stable, business conditions, such as demand and supply, vary.
Moody’s believe that growth in the shipping sector will likely be lowest for the dry bulk segment because China's economic slowdown will keep demand low, while excess supply will remain most pronounced in the container ship segment.
Moody's said that downside risks remain high and would consider changing the outlook to negative if signs emerged that the growth in shipping supply will exceed demand growth by more than 2%.