The shipping industry faces a challenging year as freight rates come under pressure and crew costs continue to rise, according to Julian Wilkinson, Head of the Moore Stephens Shipping Industry group.
He said: “The shipping markets were challenging in 2010 because, despite positive signs on the demand side, surplus tonnage, a lack of funding, a continuing glut of newbuildings and fierce competition led to downward pressure on freight rates."
However, he said confidence levels in the first half of 2010 reached 18-month highs.
“Owners started to think about new investments, and about finance costs coming down. Confidence suffered a minor wobble towards the end of the year, but 2010 still closed on talk of IPOs, strategic acquisitions, joint ventures and major investments.”
Wilkinson warned that although the high level of confidence should be sustained in 2011, banks will be monitoring the future viability of poor performers more closely.
He said: “Crew costs were the only operating costs to go up in 2009, did so in 2010 and will continue to do so in 2011.
“The emphasis this year will be on keeping the cash flowing.
“The banks know that shipping operations with strong leadership, governance and risk management that have survived the downturn deserve continuing support. They will listen to those with robust investment plans, who, in turn, will be encouraged by low interest rates.
“Despite continuing concern over the level of newbuildings, it has been suggested that shipping could be back to strength in another two years.”