More scrapping, sparked by eco-rules, eases overcapacity concerns
SHIPPING accountant consultants Moore Stephens, in their latest quarterly shipping confidence survey, reports the industry spirits have recovered from their lowest level in 2011.
The upturn in mood appears to be related to an increase in scrapping, prompted by environmental rules that make ships obsolete, resulting in a reduction of the overcapacity problem that has been with the industry for years.
Scrapping was cited in a number of responses to the survey, often because it has been promoted by environmental regulation, such as the Ballast Water Management convention.
The industry hopes that as more and more older ships go to scrap yards, and businesses start to recover, freight rates will increase.
But Moore Stephens shipping partner Richard Greiner was doubtful. "Scrapping activity has increased, although there is simply not enough demolition capacity in the world for this to be a solution."
Other respondents were also sceptical. "More demolition and greater discipline in respect of newbuildings is required before the upturn can begin," said one.
Said another: "Even though scrapping levels are high, the number of newbuildings on the market will continue to result in oversupply and keep freight rates depressed."
Other respondents stressed macro-economic worries, in particular, the financial difficulties of the eurozone and the problem of the availability of third-party finance.
But the likelihood of respondents making a major investment or significant developments over the next 12 months was up on the previous survey, on a scale of one to 10, from 5.3 to 5.4 - the highest level since May 2011.
Said Mr Greiner: "The inescapable conclusion is that those companies that emerge intact and profitable from one of the darkest periods in recent shipping memory will be among the leanest and greenest the industry has ever seen."
SHIPPING accountant consultants Moore Stephens, in their latest quarterly shipping confidence survey, reports the industry spirits have recovered from their lowest level in 2011.
The upturn in mood appears to be related to an increase in scrapping, prompted by environmental rules that make ships obsolete, resulting in a reduction of the overcapacity problem that has been with the industry for years.
Scrapping was cited in a number of responses to the survey, often because it has been promoted by environmental regulation, such as the Ballast Water Management convention.
The industry hopes that as more and more older ships go to scrap yards, and businesses start to recover, freight rates will increase.
But Moore Stephens shipping partner Richard Greiner was doubtful. "Scrapping activity has increased, although there is simply not enough demolition capacity in the world for this to be a solution."
Other respondents were also sceptical. "More demolition and greater discipline in respect of newbuildings is required before the upturn can begin," said one.
Said another: "Even though scrapping levels are high, the number of newbuildings on the market will continue to result in oversupply and keep freight rates depressed."
Other respondents stressed macro-economic worries, in particular, the financial difficulties of the eurozone and the problem of the availability of third-party finance.
But the likelihood of respondents making a major investment or significant developments over the next 12 months was up on the previous survey, on a scale of one to 10, from 5.3 to 5.4 - the highest level since May 2011.
Said Mr Greiner: "The inescapable conclusion is that those companies that emerge intact and profitable from one of the darkest periods in recent shipping memory will be among the leanest and greenest the industry has ever seen."