23 MAR 2019

Confidence in the shipping industry has risen in the last three months despite ongoing geopolitical uncertainty, according to the latest Shipping Confidence Survey from leading shipping adviser and accountant BDO.

The average confidence level rose to 6.2 out of maximum score of 10.0 this quarter compared to 6.0 in Q4 2018.

Confidence was up in Europe, from 6.1 to 6.3, and in North America, from 5.2 to 5.6. In Asia, meanwhile, there was a drop in overall confidence levels to 5.8 from the 12-month high of 6.3 recorded in the previous quarter.

Brokers were behind much of the increase in confidence. Their score was up from 5.2 to 5.9. The rating for owners and managers was down slightly from 6.4 to 6.3 and from 6.0 to 5.8 respectively. Charterers’ confidence was also down, from 6.8 to 6.0, although this still compared favorably with the rating of 5.0 returned 12 months ago.

According to the BDO quarterly survey, the likelihood of respondents making a major investment or significant development over the next 12 months was down from 5.5 to 5.3 out of 10.0. Charterers’ confidence in this regard reached a record high of 7.3. Brokers’ confidence was also up, from 4.1 to 4.9. However, owners recorded a fall from 6.3 to 5.4. Managers’ ratings were unchanged at 5.6. Expectations were up in Europe from 5.2 to 5.3, but down in Asia from 6.2 to 5.2.

The number of respondents who expected finance costs to increase over the coming year was down from 67 percent to 48 percent, the lowest figure since August 2016. The figures for all categories of respondent were down, in the case of charterers from 80 percent to 33 percent.

Demand trends were cited by 26 percent of respondents as the factor most likely to influence performance over the next 12 months. Competition (19 percent) and finance costs (13 percent) featured in second and third place respectively in this context.

Net freight rate sentiment was positive in all three main tonnage categories identified  in the BDO survey, with 51 percent of respondents expecting higher rates over the next 12 months in the tanker market. This represents a drop of nine percentage points on the previous survey score of 60 percent. Respondents expecting lower tanker rates fell from nine percent to six percent this quarter.

In the dry bulk sector, expectations of rate increases were up strongly from 38 percent to 52 percent, while the numbers anticipating lower rates climbed slightly to 13 percent from 11 percent. The numbers expecting higher container ship rates rose by one percentage point to 26 percent, whilst those expecting lower container ship rates increased to 25 percent from 23 percent.

When asked to predict where crude oil prices would be in 12 months’ time, 37 percent of respondents in BDO’s survey opted for the $60-$69/barrel range. This figure is almost identical to the figure of 36 percent from February 2018. 17 percent of respondents opted for the $50-$59/barrel  range compared to the 19 percent who did so last year, while 28 percent favored the $70-$79/barrel range which was unchanged from 12 months ago.

Richard Greiner, Partner, Shipping & Transport at BDO, says, “It is encouraging to begin the year with a small uptick in confidence. Despite continuing doubts and fears about trade wars, China’s GDP, uncertainty over exchange rates, President Trump’s decision-making, Brexit and general political instability in many parts of the world, shipping can still find reasons to be cheerful.”


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