Moody's Sees No Relief for Bulk or Container Shipping

Ratings and research agency Moody's has downgraded its outlook for dry bulk and container shipping to negative, from stable, suggesting that business conditions are expected to worsen. The agency forecasts that supply will exceed demand over the course of 2016 and perhaps even into 2017, thanks to a large volume of newbuilds coming onto the market and weak demand growth.

"Even though the tanker segment continues to perform strongly, we expect the supply-demand gap for the industry overall to exceed two percent in 2016, and possibly into 2017, as large new vessel deliveries coincide with subdued demand for dry bulk and container ships," said Marie Fischer-Sabatie, senior vice president at Moody’s and author of the report. 

For bulk shipping, a soft Chinese industrial sector means that worldwide chartering activity is expected to be similar to 2015. Additionally, the firm predicts that a high number of newbuilds will lead to growth of bulker supply outpacing growth of demand by 2.5 percent this coming year, despite high scrapping activity and an expected 45 percent rate of order cancellation / deferred delivery.

In container shipping, continued delivery of new, ultra-large vessels is expected to result in supply growth outpacing demand growth by three percent. While consolidation could eventually help stabilize prices, Moody's says, it does not expect to see visible improvement in the near term. 

Tankers overall continue to look good, Moody's says, with low crude prices pushing up demand for ton-miles and even floating storage. Product tankers are benefitting from the relocation of refining activities out of the OECD into lower-cost nations, raising ton-miles for refined product transportation. However, with 38 million dwt of tankers (of all classes) scheduled for delivery this year, Moody's foresees stable rates, but only limited further improvement.