Print article

Confidence levels hold up,
but concern persists about newbuilding glut

Overall confidence levels in the shipping industry have stabilised, according to the latest Shipping Confidence survey by shipping accountant and adviser Moore Stephens, although a sustainable recovery in the markets still appears to be some way off. The depression in freight rates seems likely to persist amid continued concerns about the level of newbuildings set to enter the market over the next two years.

 On a scale of 1 to 10, the average confidence level expressed by respondents in November 2009 in the markets in which they operate was 5.7, the same as in the previous survey in August 2009, which itself was the highest level recorded for twelve months. But this is still significantly down on the 6.8 recorded in the first Moore Stephens survey, in May 2008.

Charterers showed the most significant drop in confidence over the latest three-month period, down from 5.8 to 5.6, while confidence among brokers increased slightly, from 5.6 to 5.7.

Once again, the survey revealed a continuing level of concern over the newbuilding orderbook. “There are too many ships already in operation, and even more to come, so there will be very little scope to increase freight rates,” said one respondent, echoing the thoughts of a number of others who responded to the survey. Other comments included, “There is only enough cash to fund half the orderbook, so something has to give”, and, “The massive orderbook is a great cause for concern”. One respondent said that the key to the massive orderbook crisis was for “the banks not to finance any more projects and for shipyards to agree to delays in delivery dates”.

 For the fourth successive survey, respondents identified demand trends as the most important factor likely to affect their business performance over the coming year, followed by competition and the cost and availability of finance.

back