Credit crunch fails to dampen enthusiasm

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 Jun 2008

A survey by Moore Stephens shows that overall confidence in the shipping market for the next twelve months remains unaffected by the global credit crunch. But two-thirds of shipping interests expect finance costs to rise - a ten per cent increase on levels reported in the last survey, in March 2008 – while there has also been a fall in the number of owners who expect to make a major business investment in the next twelve months. On a scale of 1 to 10, the overall confidence shown in the market by those who responded to the survey was unchanged at 6.8. Owners and managers expressing the highest levels of confidence at 7.0 (marginally down on the previous survey) against the 6.3 recorded by charterers.
Some respondents acknowledged that the current financial crisis could affect world trade. But this was balanced by the expectation that continuing high demand from Asia and the Far East, in particular, would ensure that shipping would ride out the financial slump. Meanwhile, a shortage of suitably qualified crew – which could ultimately lead to owners being forced to lay up vessels and default on mortgage repayments – and the escalating cost of fuel impacting on the ability to invest in other areas, were recurring themes among respondents.
Demand trends and competition emerged as the factors deemed most likely to influence performance over the next twelve months. Operating costs, which were cited as the most significant factor in this category in the last survey, came in fourth, behind the cost of finance. Other concerns included doubts about the industry’s ability to build sufficient numbers of new ships to meet demand, and the inability of freight rates to keep pace with the rocketing price of oil.
Opinions about the direction in which freight rates in the tanker market were likely to move over the next twelve months showed some sharp variations, with 64 per cent of charterers expecting rates to increase, and only 31 per cent of owners sharing that view.
In the dry bulk sector, meanwhile, there was evidence of a levelling-out in market expectations, with a 4 per cent increase, to 32 per cent, in the number of respondents who expected rates to be higher in twelve months’ time, and a corresponding fall, from 40 to 35 per cent, in those who were predicting lower rates.

Source: Maritime Global Net