Global shipping outlook turns stable from positive

RIYADH: As the demand slightly outstrips supply, Moody’s Investors Service has changed the outlook for the global shipping industry to stable from positive for the next 12 to 18 months, Arab News reported.

A report issued on Monday said the change is driven by tough comparisons with the very strong cash flows generated this year rather than a deteriorating business environment. It predicted business and financial conditions to remain solid, but are unlikely to get better than they already are today.

“Earnings for container and dry bulk carriers are at record levels; however, we expect earnings to fall from their 2021 peak but remain high,” said Daniel Harlid, a vice president, senior analyst at Moody’s and the author of the report.

“Still, limited deliveries of new vessels next year will help keep freight rates at elevated levels.”

According to the report, demand for goods and commodities remain high and will stay robust in 2022. Growth rates have most likely peaked and will start to decelerate next year. Record high profitability and cash flow generation have been used to pay down debt.

Capital spending of shipping companies will continue to increase. Therefore, Moody’s expects orders for newer and more energy-efficient ships to continue to be a theme during 2022, as shipping companies prepare for stricter environmental regulations that will gradually be phased in from 2023.

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