Cargo Business Newswire

Thursday, May 1, 2014

Moody's upgrades world shipping outlook to stable

For the first time since June 2011, Moody's changed its forecast for the global shipping industry from negative to stable.

"The revision reflects our expectation that the global industry's aggregate EBITDA will rise by mid-single digits in percentage terms year-over-year in 2014, in line with our -5 percent to 10 percent growth range for a stable outlook," says Mariko Semetko, a Moody's assistant vice president and analyst.

"And while overcapacity remains a concern," Semetko continued, "we believe industry conditions are at a trough and that the supply-demand gap will not worsen materially. In this environment, we expect the supply of vessels will exceed demand by no more than 2 percent, or that demand will exceed supply by up to 2 percent," added Semetko.

Moody's announced its revised outlook in its latest shipping report, "Change to Stable Outlook for Shipping Sector Reflects EBITDA Growth." The report also asserts that cost reductions, including lower bunker prices and slow steaming, have driven the growth in EBITDA, even as market conditions remain tepid.

Other tactics that have helped the sector rebound, according to Moody's, include postponing and cancelling new ship deliveries, scrapping obsolete vessels, and idling.