WITH capacity outstripping demand, freight rates in the global shipping industry are only expected to rise moderately in the next 12-18 months, according to Moody's Investors Service's annual outlook.
However, Moody's predicts the industry would be stable for the next 12-18 months.
It said the "supply glut limits the ability of companies to raise the rates they charge for shipping freight, which constrains their revenue and growth," reports Lloyd's List.
In container shipping, Moody's notes that shipping companies are continuing to order ultra-large containerships and warns of a supply glut into 2016.
"The vessel backlog for containerships will remain high through 2015."
Over time, if the backlog eases and older ships continue to be scrapped, the gap between supply and demand will decrease.
However, Moody's says this is "unlikely to take place before 2016."
Supply in the dry bulk sector is problematic, as demand for dry bulk will rely on economic growth in China, which is slowing.
Furthermore, deliveries this year have been delayed, with Moody's citing Drewry Maritime Research as saying deliveries of dry bulk carriers amounted to 19 million deadweight tonnes in the first half of 2014.
An additional 44 million dwt are scheduled to be delivered by the end of the second half.
"But we may see vessel deliveries being pushed out because only about a quarter of the deliveries scheduled at the beginning of 2014 have been completed thus far," Moody's noted adding that if delays persist next year, it could lift rates.
CONTAINER
12 October 2014 - 16:52
Moody's warns of continuing containership supply glut into 2016
WITH capacity outstripping demand, freight rates in the global shipping industry are only expected to rise moderately in the next 12-18 months, according to Moody's Investors Service's annual outlook.
CONTAINER
12 October 2014 - 16:52
Moody's warns of continuing containership supply glut into 2016
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