Source: PortWorld
Bunkerworld poll has revealed that many remain pessimistic about prospects for the shipping industry over the next few years.
Despite increasing reports in recent weeks that the global economy is in recovery, 40% of the poll’s respondents believe that the shipping industry has not even reached the market bottom.
Answering the poll’s question of when the shipping industry might return to its glory days pre-2008 in terms of freight volumes and new orders, this 40% of respondents did not expect a recovery until between 2012 and end-2015.
42% said that the shipping industry would need four years to recover from last year’s downturn with a revival between 2011 and 2012.
Analysts have said that the main pressure on shipping at present is an oversupply of tonnage in relation to significantly weakened trade demands, a situation that could get worse over the next few years due to newbuilding deliveries.
Echoing this view is Nils Smedegaard Andersen, CEO of leading shipping group A.P. Moller-Maersk, who just last week said that the supply and demand imbalance in shipping will persist for years, weighing on earnings.
Ship brokers tell Bunkerworld that the shipping industry should not be surprised that it will take at least a few years before ship operators are able to stay consistently in the black.
These brokers highlighted that many yards around the world have not secured a single order for months already. Newbuilds will not be commissioned on the scale and intensity seen pre-2008 until either tonnage demand spikes dramatically enough to employ all the ships ordered during the ‘boom times’, or cancellations are made on a massive level in response to weakened demand.
Either way, it is going to take at least four years before owners have even the slightest confidence to go on a spending spree at the yards, a Singapore-based broker told Bunkerworld.
Several industry leaders have in fact said the current crisis clearly demonstrates shipping companies’ appetite for ordering much more than the markets might require.
According to Dr Helmut Sohmen, chairman of BW Group, "some now look at the global economic problems as the cause of the shipping crisis, but the truth is that even without a global crisis we were building more ships than we were likely to need."
In a speech to the maritime industry this year, Dr Sohmen said that good times in shipping rarely last as long as the bad times.
"The reason is simple," he said. "Tonnage supply will always outrun demand as ships can be built even faster."
Dr Sohmen also pointed out that shipping is an integral part of global economic activity.
12% of the Bunkerworld poll respondents think that the industry will recover to its pre-2008 glory days by the end of 2010 as the global economy is already in recovery.
A Singapore-based executive for a major container shipping liner however, told Bunkerworld that "these respondents have been overly optimistic since most of these ‘crisis is over’ claims are being made on slivers of data covering only small segments of the entire economy whose positive implications for shipping are either non-existent or overblown".
"Why should shipping companies start popping champagne just because Chinese manufacturing data has gone up on a single month?" he added. "Yes maybe bulk carrier owners can start thinking that the bottom has passed, but shipping must look at the entire global economic landscape to have a good understanding of how freight rates will perform in the medium to long term."
Meanwhile, another highlight of Dr Sohmen’s speech was his advocacy for massive cancellations, a stance that has been echoed by several industry leaders. This could shrink the order-book to what is really required in the markets, as opposed to the overcapacity seen at present.
"Perhaps this is why 4% of your poll’s respondents said that the industry will never return to its glory days pre-2008," one ship broker told Bunkerworld.
"That’s quite a serious claim, but not an impossible scenario, if the industry actually learns from this crisis and decides that prudency and conservative ordering should be the new way of running their businesses," he said.
These Bunkerworld poll findings are not new to the industry, as other polls have also indicated that shipping industry does not believe the downturn is about to end.
63% of those questioned in a recent one by the international legal practice Norton Rose Group expected widespread bank enforcement of troubled shipping loans.
"Notwithstanding improvements in certain sectors, the prevailing view seems to be that business will get worse before it gets better for the shipping industry," said a statement from Norton Rose.
Ultimately, according to Dr Sohmen, "being capital-intensive, shipping is critically dependent on the health of the financial system and the availability of credit."
Bunkerworld poll has revealed that many remain pessimistic about prospects for the shipping industry over the next few years.
Despite increasing reports in recent weeks that the global economy is in recovery, 40% of the poll’s respondents believe that the shipping industry has not even reached the market bottom.
Answering the poll’s question of when the shipping industry might return to its glory days pre-2008 in terms of freight volumes and new orders, this 40% of respondents did not expect a recovery until between 2012 and end-2015.
42% said that the shipping industry would need four years to recover from last year’s downturn with a revival between 2011 and 2012.
Analysts have said that the main pressure on shipping at present is an oversupply of tonnage in relation to significantly weakened trade demands, a situation that could get worse over the next few years due to newbuilding deliveries.
Echoing this view is Nils Smedegaard Andersen, CEO of leading shipping group A.P. Moller-Maersk, who just last week said that the supply and demand imbalance in shipping will persist for years, weighing on earnings.
Ship brokers tell Bunkerworld that the shipping industry should not be surprised that it will take at least a few years before ship operators are able to stay consistently in the black.
These brokers highlighted that many yards around the world have not secured a single order for months already. Newbuilds will not be commissioned on the scale and intensity seen pre-2008 until either tonnage demand spikes dramatically enough to employ all the ships ordered during the ‘boom times’, or cancellations are made on a massive level in response to weakened demand.
Either way, it is going to take at least four years before owners have even the slightest confidence to go on a spending spree at the yards, a Singapore-based broker told Bunkerworld.
Several industry leaders have in fact said the current crisis clearly demonstrates shipping companies’ appetite for ordering much more than the markets might require.
According to Dr Helmut Sohmen, chairman of BW Group, "some now look at the global economic problems as the cause of the shipping crisis, but the truth is that even without a global crisis we were building more ships than we were likely to need."
In a speech to the maritime industry this year, Dr Sohmen said that good times in shipping rarely last as long as the bad times.
"The reason is simple," he said. "Tonnage supply will always outrun demand as ships can be built even faster."
Dr Sohmen also pointed out that shipping is an integral part of global economic activity.
12% of the Bunkerworld poll respondents think that the industry will recover to its pre-2008 glory days by the end of 2010 as the global economy is already in recovery.
A Singapore-based executive for a major container shipping liner however, told Bunkerworld that "these respondents have been overly optimistic since most of these ‘crisis is over’ claims are being made on slivers of data covering only small segments of the entire economy whose positive implications for shipping are either non-existent or overblown".
"Why should shipping companies start popping champagne just because Chinese manufacturing data has gone up on a single month?" he added. "Yes maybe bulk carrier owners can start thinking that the bottom has passed, but shipping must look at the entire global economic landscape to have a good understanding of how freight rates will perform in the medium to long term."
Meanwhile, another highlight of Dr Sohmen’s speech was his advocacy for massive cancellations, a stance that has been echoed by several industry leaders. This could shrink the order-book to what is really required in the markets, as opposed to the overcapacity seen at present.
"Perhaps this is why 4% of your poll’s respondents said that the industry will never return to its glory days pre-2008," one ship broker told Bunkerworld.
"That’s quite a serious claim, but not an impossible scenario, if the industry actually learns from this crisis and decides that prudency and conservative ordering should be the new way of running their businesses," he said.
These Bunkerworld poll findings are not new to the industry, as other polls have also indicated that shipping industry does not believe the downturn is about to end.
63% of those questioned in a recent one by the international legal practice Norton Rose Group expected widespread bank enforcement of troubled shipping loans.
"Notwithstanding improvements in certain sectors, the prevailing view seems to be that business will get worse before it gets better for the shipping industry," said a statement from Norton Rose.
Ultimately, according to Dr Sohmen, "being capital-intensive, shipping is critically dependent on the health of the financial system and the availability of credit."
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