moody's

Moody’s: Shipping Outlook turns stable on EBITDA growth

According to Moody’s, shipping Outlook turns stable on EBITDA growth. The global shipping industry is striving to perform better overall than they expected this year. They expect the aggregate EBITDA of the shipping companies to grow by 3%-5% in 2021. Because the dry bulk sector is witnessing the recovery from pandemic lows and the continuance of good market fundamentals for container shipping. The balance and overall demand of the industry is set to improve in 2021. This is one of the main reasons for the outlook change. However, the dangers remain.

However, the limited supply of new vessels and capacity management should act as a cushion for adverse market conditions. The order books for all three sectors of sea freight remain at low levels compared to their entire fleet. In the container shipping sector, container shipping companies can resume the cancellation of sailing ships. Because it is reducing capacity to match demands. However, the tanker and dry bulk markets will be more sensitive to changes in demand during 2021. Because they have a very limited capacity compared to the global container market. Hence, their view of the container sector has changed from negative to stable. The container shipping industry will record one of its strongest years since 2010.

Views for dry bulk have also changed from negative to stable. These expectations indicate that the market environment will gradually improve over the next 12 to 18 months. The improvement of major dry bulk goods has been more or less done by China. In China, iron ore imports in the year to August were 11% higher than in the same period in 2019. The supply-demand balance is also set to improve. However, the downside risks are still evident. Like a long lockdown that can reduce demand.

But in the tanker sector, the outlook has shifted from stable to negative. Tanker operators had a very strong first half of the year. Because the combination of the sudden fall in oil prices and the maintenance of production led to high demand for storage. As a result, charter rates peaked between March and May this year. But since the end of the year, a significant portion of the fleet remains in stock, floating or idle. This is a temporary effect that will probably be reversed. But a reverse rotation may lead to a higher scrapping.

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