The shipping industry is at its most upbeat in two years, according to the latest Shipping Confidence Survey from the international accountant and shipping adviser Moore Stephens.
According to shipping managers, charterers and brokers across North America, Europe and Asia, there was improved expectation of freight rate increases over the next 12 months, particularly in the dry bulk sector, but a mixed response as to the likelihood of new investment in the industry.
The survey, which measures confidence on an index of 1 (low) to 10 (high), covered the three months to February 2013. It showed the average confidence level expressed by respondents in the markets in which they operate was 5.8, compared with the figure of 5.6 recorded in the previous survey in November 2012. The survey was launched in May 2008 with a confidence rating of 6.8.
"It suggests that confidence is slowly building, indicating the start of a credible recovery," said Richard Greiner, the Moore Stephens shipping partner.
"The indications are that the worst of the current shipping cycle could be over. But serious challenges lie ahead. Operating costs are going up, particularly fuel and manpower, and there is the added burden of increasing operational and environmental regulation."
The confidence rating for managers of 6.2, up from 6.0 last time, was the highest since August 2010, while that for charterers was up from 5.6 to 6.0, the highest since November 2010. Confidence on the part of owners was up from 5.5 to 5.7, the highest since May 2011, while for brokers the increase was from 5.3 to 5.6, the highest level in the past 12 months.
A number of respondents felt that a recovery was on the way. "Demand trends for seaborne trade are generally positive, and tonnage reaching obsolescence due to age and regulation will exit the market," according to one respondent.
"This year will be crucial in determining who will be able to benefit from the upswing in the market when it happens. It will depend on the banks' attitude towards bad debt and increased foreclosure, and the phasing out of uneconomical, old ship designs."
A number of respondents complained about the role of the banks. "The lack of available finance severely restricts many good deals from getting off the ground," said one, while another pointed out: "There may be a measurable upturn in the shipping industry by end-2013, but will the banks be with us? I doubt it."
Fuel costs were uppermost in the thoughts of a number of respondents. While some talked about the exciting prospects for LNG propulsion, others remained concerned about the rising cost of operating with heavy fuel oil.
The likelihood of respondents making a major investment or significant development over the next 12 months was down in Asia, from 5.7 to 5.4, and in North America from 5.4 to 4.9, but up in Europe from 5.2 to 5.5, their highest level since May 2011.
"Those who are able to purchase new designs of ships at competitive prices this year with delivery within the 2015 horizon should be well-positioned when the market turns. Newish ships based on old designs will very quickly become obsolete," one respondent noted.
"It is likely to be a ... different industry which emerges from this prolonged downturn, one in which the banks will exert greater control for some time to come," added Mr Greiner of Moore Stephens.
"Vessel values are likely to remain under pressure this year, and there is a lot of financial restructuring yet to be done. But shipping will retain its entrepreneurial flair, which is in no way undermined by operating from a stronger financial base."
