Overall confidence levels in the shipping industry fell in the three months to November 2015, according to the latest ‘Shipping Confidence Survey’ released by accounting and advisory firm, Moore Stephens.
The average confidence level expressed by respondents in the markets in which they operate was 5.6 on a scale of 1 (low) to 10 (high).
This compares to the 5.9 recorded in August, 2015. The survey was launched in May, 2008 with a confidence rating of 6.8.
All main categories of respondents recorded a fall in confidence this time, most notably charterers, which was down from 6.5 to 5.5.
The confidence of managers was also down from 6.4 to 5.8, that of brokers from 5.2 to 4.6, and that of owners from 5.8 to 5.7.
Many respondents expressed continuing concern about over-tonnaging and excess shipbuilding capacity.
One respondent said: “The over-ordering of ships by investment funds, together with the huge shipbuilding capacity created by China, are not conducive to an orderly market, with the result that shipping investments remain very risky.”
The likelihood of respondents making a major investment or significant development over the next 12 months was down on the previous survey, on a scale of 1 to 10, from 5.3 to 5.2.
Charterers, managers and brokers were less confident in this regard than they were three months ago, but the confidence of owners was up, from 5.5 to 5.7.
Demand trends, competition and port congestion featured as the top three factors cited by respondents as those likely to influence performance most significantly over the coming 12 months.
One respondent said: “Excessive regulation makes control of costs even more difficult. Furthermore, what is the point of creating rules when international authorities cannot agree how to apply them, such as in the case of ballast water management?”
Shipping partner Richard Greiner, said: “The inherent volatility of the shipping industry is part of its appeal to investors, for whom there is seldom any reward without risk. But confidence historically fluctuates more in a volatile market than in a stable one, and shipping is nothing but volatile at the moment. The small drop in industry confidence levels over the three months to end-November is therefore not a great surprise.
“Informed awareness and the ability to react in a timely manner are the best defence against external influences on the industry. But what of those other inhibitors of shipping confidence, which might be said to be of the industry’s own making?
“Only increased ship recycling and rationalisation of business plans can effectively address these issues, and the need to take a proactive approach is borne out by the current state of the markets.
Greiner concluded: “Well-informed owners and investors are not in the habit of throwing money away on lost causes. Shipping remains a good business to be in, its continued existence assured by its singular capabilities. The outlook remains volatile, but exciting.”
