Fitch revises 2016 shipping outlook to negative

Fitch revises 2016 shipping outlook to negative

Fitch Ratings has revised the global shipping sector outlook for 2016 to negative from stable in 2015. “We expect muted global trade growth and the economic slowdown in emerging markets to exacerbate overcapacity, leading to declining and volatile freight rates,” the company said in a release. Dry bulk and container shipping will remain under pressure, while tanker and LNG shipping should fare better, Fitch said.

China’s slower growth increase overcapacity, Fitch said. The agency expects container shipping capacity to rise 6% in 2016 on top of a 9% increase in 2015, easily outpacing demand growth of 2% this year and 3%-4.5% in 2016.

“[T]he financials of smaller, unrated, especially dry bulk shippers will remain stretched, which will probably lead to more bankruptcies,” Fitch warned.

Fitch’s ratings downgrade is echoed by leading analyst comment contained in the just published issue of Maritime CEO magazine. Jeffrey Landsberg from Commodore Research wrote in the magazine on dry bulk: “There is no reason to be even remotely bullish for freight rates prospects through even 2017.” Meanwhile, Lars Jensen from container analysts SeaIntel warned: “[S]tructural overcapacity problems will not be resolved in the coming years”.

Maritime CEO magazine features some of the best-known analysts in shipping. The full magazine can be accessed for free by clicking here.

 

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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