Overcapacity and rising fuel costs in container shipping have driven confidence levels in the industry downwards for the fourth successive quarter to its lowest point in two years.
Accountant and shipping advisor Moore Stephens found that the most dominant theme running throughout the responses to its latest survey was the threat of overcapacity, followed by concern over continuing increases in the cost of fuel.
Last month, the average confidence level (on a scale of 1-10) expressed by respondents was 5.6, compared with 5.8 recorded in February. This is the lowest figure recorded since May 2009, when confidence stood at 5.5.
Moore Stephens found the mood among respondents noticeably downbeat.
“The key word for most companies right now is ‘survival’,” noted one respondent.
And several expected the current slump in confidence to persist for some time.
“The shipping market will be severely depressed for the next three years,” said one, with another predicting markets would not pick up “for the next two years”.
Neither could respondents see any realistic prospect of spending their way out of the current downturn.
However, not all respondents took such a pessimistic view. One believed all maritime sectors would start to pick up in the last quarter of 2011.
But for most the outlook appeared gloomy, with particular concern over overcapacity. One respondent said: “The severe oversupply of tonnage in every sector is biting hard, and supply will remain ahead of demand for at least a couple of years.”
Moore Stephens’ Shipping Partner, Richard Greiner, said: “It is disappointing to find that confidence in the shipping sector has dropped to a two-year low.
“Once again, it was the threat to profitability posed by overcapacity which most frequently exercised the minds of those who responded to the survey.
“Only time will tell how this will play out, but it was noticeable that a number of respondents referred to the important role that ship-breaking could play over the next couple of years.”
He said this was an extreme solution to the problem, and added: “It will never address the true volume of tonnage overhang, especially since demolition prices in Asia appear to be on the slide, to the disappointment of owners hoping to cash in on healthy prices for their old ships.”