Shipping sector recovery is expected in 2014-15

Σπύρος ΚλωνήςGreek Market

Analysts have revised their estimates for the recovery of the shipping industry to 2014 or 2015, with a report from professional services giant Deloitte saying that 2012 saw the industry in recession, with significant declines in profits and valuations.

The report points to rapid changes in the overall international environment, such as the eurozone debt crisis, the fragile revival of the US economy and a contraction in China’s growth rate, which have had a profound impact on shipping as well.

In the first quarter of 2013, for example, China missed its growth targets, something that has not happened since 1997. The drop in demand for cargo transport along with an increase in supply have led to shrinking profit margins. In some cases, revenues have been slashed almost to the level of operating costs.

In 2012, the number of tankers on the global market rose by 2.7 percent compared to the previous year, freighters increased by 8.5 percent and containers by 5.2 percent. The growth rate was similar this year, with increases of 2 percent in the number of tankers, 7 percent in freighters and 6 percent in containers. Prices, however, consistently followed a downward course, led by the freighter market, which saw a 30 percent drop in 2012 and an additional, albeit smaller decline of 8.1 percent in the first quarter of 2013. Prices in the container market eased 3.6 percent in 2012, but have recovered 6.85 percent this year. Tankers did quite well in 2012 but that was followed by a slowdown in the first half of 2013.

Despite the sluggish international climate, Greek shipping has fared rather well, with orders for new ships remaining at high levels in 2012 and growing 44 percent in the period from January to June this year compared to the same period last year. Greek shippers hit a new record in commissions for new ships in May 2013 with an astounding 153 percent increase compared to April (19 new orders). In May alone, they ordered 48 new ships, while in the first four months of 2013, total orders reached 56.

Greek shipowners placed orders for the following vessels: 26 dry-bulk carriers, 10 from China (by category, eight are capesize, two handymax, six supramax, four ultramax, two panamax and four kamsarmax); 16 tankers (six of which are mid-range, seven aframax and 3 VLCC); and six containers (two of which are sub-panamax, two small panamax and another two post-panamax).

According to Deloitte’s analysis, in 2012 47 percent of public offerings on the New York Stock Exchange were made by Greek-owned shipping companies. These were GasLog, owned by Peter Livanos, Costamare Inc, owned by Constantinos Constantakopoulos, and Safe Bulkers, owned by Polys Hajioannou.

 

Analysts have revised their estimates for the recovery of the shipping industry to 2014 or 2015, with a report from professional services giant Deloitte saying that 2012 saw the industry in recession, with significant declines in profits and valuations.

The report points to rapid changes in the overall international environment, such as the eurozone debt crisis, the fragile revival of the US economy and a contraction in China’s growth rate, which have had a profound impact on shipping as well.

In the first quarter of 2013, for example, China missed its growth targets, something that has not happened since 1997. The drop in demand for cargo transport along with an increase in supply have led to shrinking profit margins. In some cases, revenues have been slashed almost to the level of operating costs.

In 2012, the number of tankers on the global market rose by 2.7 percent compared to the previous year, freighters increased by 8.5 percent and containers by 5.2 percent. The growth rate was similar this year, with increases of 2 percent in the number of tankers, 7 percent in freighters and 6 percent in containers. Prices, however, consistently followed a downward course, led by the freighter market, which saw a 30 percent drop in 2012 and an additional, albeit smaller decline of 8.1 percent in the first quarter of 2013. Prices in the container market eased 3.6 percent in 2012, but have recovered 6.85 percent this year. Tankers did quite well in 2012 but that was followed by a slowdown in the first half of 2013.

Despite the sluggish international climate, Greek shipping has fared rather well, with orders for new ships remaining at high levels in 2012 and growing 44 percent in the period from January to June this year compared to the same period last year. Greek shippers hit a new record in commissions for new ships in May 2013 with an astounding 153 percent increase compared to April (19 new orders). In May alone, they ordered 48 new ships, while in the first four months of 2013, total orders reached 56.

Greek shipowners placed orders for the following vessels: 26 dry-bulk carriers, 10 from China (by category, eight are capesize, two handymax, six supramax, four ultramax, two panamax and four kamsarmax); 16 tankers (six of which are mid-range, seven aframax and 3 VLCC); and six containers (two of which are sub-panamax, two small panamax and another two post-panamax).

According to Deloitte’s analysis, in 2012 47 percent of public offerings on the New York Stock Exchange were made by Greek-owned shipping companies. These were GasLog, owned by Peter Livanos, Costamare Inc, owned by Constantinos Constantakopoulos, and Safe Bulkers, owned by Polys Hajioannou.