Here’s a brief analysis of the annual survey which has polled 200 respondents across the transportation industry.
According to a survey from a leading transport agency, global shipping confidence has hit an all-time low due to fears of a possibility of a global recession in the wake of Britain’s surprise vote to leave the European Union. This comes at a time when industries globally are facing increased downturn pressure.
For example, the container sector in the global shipping segment, which transport everything in the spectrum starting from mangoes, iPhones to coal and iron are struggling with the glut of ships, tumbling global economy and feeble consumer demand.
In the annual survey by Norton Rose Fulbright, an international law firm, only 15% of the respondents saw current market conditions as positive, which marks it as the lowest level since 2009, when the survey was first started.
In the survey, 68% of the respondents felt that a global recession would pose the greatest threat to shipping in the coming years. 38% of the respondents perceived this risk to be in aviation while 20% in railways.
“The (shipping) industry is currently in the grip of the worst recession in living memory and while most of our respondents envisage an upturn in freight volumes in the next five years, any major economic shock would further exacerbate an already fragile industry,” said Harry Theochari, global head of transport at Norton Rose Fulbright.
He went on to add, “The UK’s vote in favor of a Brexit has meant that shipowners are likely to be assessing how it impacts upon their various regulatory obligations and their access to finance in a key shipping finance market,” in reference to the role played by London.
As a whole the shipping industry is facing a serious funding crunch, caused partially by banks cutting their exposure to this sector. Analysts estimate the lack of funding to be as much as $30 billion.
“Bank debt is expected to remain the industry’s principle source of funding, although for many shipowners funding remains thin on the ground and few respondents believe access to finance is set to become easier,” said Theochari.
The survey polled 200 respondents across the entire transportation industry, including government entities, companies and various financiers. All respondents have said the railways and aviation have better prospects than other segments in this sector due to comparatively better funding and decreasing oil prices.
“Sentiment is high in the aviation and rail industries, buoyed by the expectation of increased passenger numbers,” said Theochari. “However, shipping continues to feel the effects of overcapacity in many markets, and an increase in enforcement actions is widely predicted.”
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