Industry's shipping confidence index drops to 4-year low to 5.3 in August

OVERALL confidence levels in the shipping industry dropped to the four-year low to 5.3 of a scale of one to 10, according to international accountant and shipping adviser Moore Stephens.

Oversupply of ships and a sluggish global economy were blamed by many respondents. "Supply trends are negative. Banks are reluctant to put out any money, let alone new money. The economic outlook, particularly in Europe, is dismal, while China looks increasingly likely to suffer a hard landing," said one respondent.

The August confidence level was down 0.4 point from 5.7 recorded in the previous survey in May, and was also identical to the figure posted one year ago in August 2011.

Both August 2012 and 2011 figures were the lowest recorded since the survey started in May 2008 at a rating of 6.8.

Charterers were the only ones with more confidence, rising 0.7 points to 5.7 in August compared with five in May. The category of managers had the confidence level at 5.9, down from six last time. Owners' confidence was down to 5.1 from 5.6, the lowest ever. Also, confidence levels for brokers fell to their all-time low from 5.2 to five.

In Asia, the confidence hit a new low of 5.4, down from 5.7 last time, implying that Asian market is full of problems ahead. In Europe, confidence dropped to 5.2 from 5.6 after three consecutive quarters of increase. In North America, confidence was flat at 5.5.

Said one respondent: "The recovery of the shipping industry will depend on the recovery of European economies, the amount of new tonnage and the development of China's import and export markets. The current situation is unlikely to change in the next 12 months."

But some saw potential advantages in the current situation and said: "Security held in long-term contracts, together with opportunities to benefit from lower newbuilding costs and the exploitation of new government regulations makes for a healthy outlook."

On rates over the next 12 months, 32 per cent expected them to rise, 51 per cent said they would stay flat while 17 per cent predicted a fall. In the previous survey, most respondents expected higher rates.

Moore Stephens shipping partner Richard Greiner said: "In some respects, shipping has been bucking the trend for the past 12 months, exhibiting increased confidence despite the political and financial woes in Europe and elsewhere, and the problems of over-tonnaging and falling rates."