Moody’s: Stable outlook for global shipping companies on 4%-5% earnings growth
The outlook for the global shipping sector for the next 12 months remains stable on the back of expected supply-demand improvements in the dry bulk and container shipping segments and overall sector earnings growth of 4%-5%, says Moody’s Investors Service in a report published yesterday. However, the outlook for the tanker segment is negative as supply remains high and charter rates low.
Moody’s report, “Shipping — Global: Dry bulk, containers keep outlook stable amid moderate overall EBITDA growth,” is available on www.moodys.com. Moody’s subscribers can access this report via the link provided at the end of this press release. The rating agency’s report is an update to the markets and does not constitute a rating action.
“Demand will slightly outstrip supply in the dry bulk segment, while supply and demand are likely to be pretty evenly matched in the container shipping segment. This combined with our expectation of 4%-5% organic earnings growth in the next 12 months underpin our stable outlook on the global shipping sector, despite continued oversupply in the tanker segment,” says Maria Maslovsky, Vice President – Senior Analyst at Moody’s.
“Recent US tariff announcements targeting steel and aluminium imports from certain countries and potential retaliatory action pose downside risks to the global shipping sector,” adds Ms. Maslovsky.
In the dry bulk segment, over the last 12-months to April 2018, the size of the global dry-bulk fleet grew by just 1%, a positive for the segment. Moody’s expects that demand will outstrip supply by about 1% in 2018. Charter rates have improved, but the rating agency expects them to remain volatile.
In the container shipping segment, broad macroeconomic growth coupled with trade growth will support demand. However, high supply growth, especially in the first half of 2018, will likely prevent material further increases in freight rates.
In the tanker segment, significant new deliveries will continue in 2018 after a surge in supply in 2017, with crude tankers representing the lion’s share. The industry will take time to absorb these deliveries so charter rates are likely to stay low over the coming 12 months.