Shipping to ride out the protracted downturn
Industry to use tried and trusted methods as well as fresh innovation in an effort to survive, says Moore Stephens
According to MANA, the shipping industry will seek out viable ways to emerge from the protracted downturn, according to a newly published report by accounting and consulting firm Moore Stephens.
“Shipping industry will use a mixture of experience and innovation to navigate what is likely to be another volatile year for the industry in 2017,” Moore Stephens said.
Citing the example of the Baltic Exchange being sold to Singapore, Moore Stephens partner Richard Greiner said that, “making predictions about the shipping industry is as volatile an undertaking as the business of shipping itself.”
Predicting shipping’s fortunes in 2017 is as precise a science as foretelling the English weather, he said.
“But some things are at least more likely to happen than not. Oil prices should continue on an upward trend on the strength of the recent Opec production cuts,” he said.
“Calls for higher levels of ship demolition will increase significantly, although not ship demolition itself,” he added.
Mr Greiner said that the cost of meeting regulatory requirements will become clearer as the industry and its financiers grapple with the financial consequences of having to burn lower-sulphur bunker fuel, while ensuring that their ballast water management systems are fit-for-purpose.
As shipping remains an indispensable industry, Mr Greiner said that shipping will be waiting to see whether “Brexit really does mean Brexit.”
So far as freight rates are concerned, he expects rates to continue to struggle to reach the levels required to ensure commercial viability, while consolidation will remain the buzzword in the liner trades.
“If operating costs do not increase, concern will spread about whether quality and safety are being sacrificed,” he said.
“The inherent volatility of the industry will continue throughout 2017, during which time shipping will resort to tried and trusted methods and to fresh innovation alike in an effort to keep its head above water.”
However, shipping is sure to find a way, he added.
“Things that will not happen in 2017 include another major fall in oil prices, and a big increase in hull insurance rates. Leicester City will not win the Premier League.”