Survey: Shipping confidence levels dive, rates likely to fall

 Confidence in the shipping business is falling, according to an industry survey by U.K. accounting firm Moore Stephens.

   Our latest survey reflects weakening demand in the global economy and growing concern across shipping markets, said Richard Greiner, Moore Stephens shipping partner.The results show an industry less confident about its ability to maintain the momentum it has built in recent years. The firm said its latest Shipping Confidence Survey revealed a significant drop in overall confidence levels in the market, and an increased expectation that rates in the tanker, dry bulk and containership sectors will fall in the next twelve months.

   On a scale of 1 to 10, the average confidence level reported by respondents was 5.6, compared to 6.8 in the previous survey in June 2008, the company said. A number of respondents acknowledged that the shipping industry is very vulnerable to the current global economic downturn, that any recovery will depend on a return to confidence in the financial markets, and that trade will inevitably suffer as a result of worldwide recession.   A number of respondents felt freight markets would never again recover to reach the levels achieved over the last three years, while others noted that difficult market conditions would likely force out undercapitalized and overexposed operators, to the ultimate benefit of the market as a whole, the company said. There was some evidence of a reluctance to conduct business with first-time customers.

   Other respondents, however, saw reasons for optimism in sustained growth in China and India, where energy demands will continue to drive tanker business, the firm said. And some firms are hopeful recent falls in commodity prices would support demand in the dry bulk and containership sectors, albeit at reduced levels.

   In the freight markets, there was evidence of a significant shift in expectations towards lower rates, most strongly in the tanker and containership sectors.

   Half of respondents to the survey expected container ship rates to be lower in 12 months' time, compared with 20 percent who expected them to be higher. The company said this represents a significant change compared to our June 2008 survey, when respondents' views were somewhat inconclusive.

Source: American Shipper