Shipping Confidence Report - September 2010

By Moore Stephens

Executive summary

Overall confidence levels in the shipping industry have shown a marginal drop over the past three months, according to our latest Shipping Confidence survey conducted in August 2010.

At the same time, however, the number of respondents expecting to make a major investment or significant development over the next twelve months was up to a record high, while the percentage of those expecting finance costs to rise over the same period hit its lowest figure since the survey was launched in May 2008.

Confidence level In August 2010, the average confidence level expressed by respondents in the markets in which they operate was 6.2 on a scale of 1 to 10, compared to 6.3 in the previous survey, which itself represented the highest level achieved for eighteen months.

Expectations of making a major investment or significant development over the next twelve months were up overall, on a scale of 1 to 10, from 5.6 to 6.0, the highest level since May 2008.

A response consistent with that which has emerged throughout the life of the survey was once again evident in terms of the factors which are likely to affect performance over the next twelve months, with demand trends (cited by 23% of respondents overall), competition (19%) and finance costs (17%) again featuring as the three most significant items, and not varying overall by more than one percentage point by comparison with the previous survey.

Finance costs There was a 9 percentage-point fall compared to the last survey in the numbers of respondents who expected finance costs to rise over the next twelve months, down from 51% in May 2010 to 42% this time. This is an all-time low for the survey and a full 24 percentage-point drop on the figure for May 2008. The movement in opinion was most marked amongst owners (down from 50% to 37%), while for managers the fall was from 53% to 45%.

Freight markets So far as the markets are concerned, the number of respondents who expected rates in the container ship market to increase over the next twelve months reached a survey all-time high of 50% – up from 47% last time and a full 20 percentage points higher than the figure in May 2008.

In the tanker sector, the number of respondents overall anticipating higher rates fell by 2 percentage points to 48%. There are indications here that expectations are being moderated in line with reality. In May 2008, 31% of owners thought that tanker rates would go up over the next year, while...