BDO: Shipping Confidence Rises

MarineLink March 22, 2019

“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,” said Richard Greiner, Partner, Shipping & Transport at BDO. Image: BDO

Even in the face of a raft of geopolitical and trade disputes that have conspired to instill uncertainty in many industries, confidence in the shipping industry rose in the last three months says the latest Shipping Confidence Survey from BDO, a survey that was launched 11 years ago.

The survey says …
The average confidence level rose to 6.2 out of maximum score of 10 this quarter compared to 6.0 in Q4 2018, according to the BDO survey. Specifically confidence was up in Europe, from 6.1 to 6.3, and in North America, from 5.2 to 5.6. But the news was not positive everywhere.
In Asia 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.

Confidence is up, investments are down
According to the 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.E xpectations were up in Europe from 5.2 to 5.3, but down in Asia from 6.2 to 5.2.

Freight rate sentiment is positive
Net freight rate sentiment was positive in all three main tonnage categories identified in the BDO survey, with 51% of respondents expecting higher rates over the next 12 months in the tanker market. This represents a drop of 9 percentage points on the previous survey score of 60%. Respondents expecting lower tanker rates fell from 9% to 6% this quarter.
In the dry bulk sector, expectations of rate increases were up strongly from 38% to 52%, while the numbers anticipating lower rates climbed slightly to 13% from 11%. The numbers expecting higher container ship rates rose by one percentage point to 26%, while those expecting lower container ship rates increased to 25% from 23%.