Business Times Malaysia reports that rating agency Moody's has downgraded the Asia-Pacific's shipping industry's outlook from 'stable' to 'negative' for the next 12 to 18 months.
The agency cited continued vessel overcapacity, weaker demand for commodities, and volatile prices for bunker fuel.
The negative outlook applies to all three sectors: dry bulk, tankers and liners.
"The excess of supply in vessels has worsened as growth in commodities demand has slowed, in line with the global economic downturn, the freezing in credit, lower consumption in the US and Europe, and volatility in currency and other financial markets. An easing in demand for oil is another factor," Moody's said in its report entitled "Asia-Pacific Shipping Sector: Preparing for Volatile Times".
It said the excess supply is apparent in all three sectors and expected to take a long time to correct.
Today, the order book for capsized bulk carriers is similar in size to that of the current global fleet. For the tanker sector, the order book for Very Large Crude Carriers (VLCCs) and Suezmax tankers is about half the size of current fleet capacity, and these new- builds will be delivered over 2008-2012.
As for the liner sector, it has an order book for 6.5 million TEUs (20-foot equivalent units), representing 55 per cent of current fleet capacity.
Moody's said rated issuers facing over-supply in vessels include PT Humpuss Intermoda Transportasi in dry bulk; MISC Bhd and BW Group Ltd in tankers; and Wan Hai Lines Ltd and MISC in liners.
"However, MISC benefits from business with (parent) Petroliam Nasional Bhd and other major oil companies, and is thus partly protected from the over-supply situation," it added.
Apart from vessel overcapacity, unstable operating costs - due primarily to volatile bunker costs - have also undermined profitability in all three sectors.
Meanwhile, Moody's said while its industry outlook is negative, the rating outlook for most of its rated issuers is stable.
The reason for this disparity is that rated shipping companies such as MISC, BW Shipping, NYK and MOL are supported by use of many of their vessels under long-term agreements, adequate liquidity, based on good access to bank financing, and diversified trade and vessel types.
The agency cited continued vessel overcapacity, weaker demand for commodities, and volatile prices for bunker fuel.
The negative outlook applies to all three sectors: dry bulk, tankers and liners.
"The excess of supply in vessels has worsened as growth in commodities demand has slowed, in line with the global economic downturn, the freezing in credit, lower consumption in the US and Europe, and volatility in currency and other financial markets. An easing in demand for oil is another factor," Moody's said in its report entitled "Asia-Pacific Shipping Sector: Preparing for Volatile Times".
It said the excess supply is apparent in all three sectors and expected to take a long time to correct.
Today, the order book for capsized bulk carriers is similar in size to that of the current global fleet. For the tanker sector, the order book for Very Large Crude Carriers (VLCCs) and Suezmax tankers is about half the size of current fleet capacity, and these new- builds will be delivered over 2008-2012.
As for the liner sector, it has an order book for 6.5 million TEUs (20-foot equivalent units), representing 55 per cent of current fleet capacity.
Moody's said rated issuers facing over-supply in vessels include PT Humpuss Intermoda Transportasi in dry bulk; MISC Bhd and BW Group Ltd in tankers; and Wan Hai Lines Ltd and MISC in liners.
"However, MISC benefits from business with (parent) Petroliam Nasional Bhd and other major oil companies, and is thus partly protected from the over-supply situation," it added.
Apart from vessel overcapacity, unstable operating costs - due primarily to volatile bunker costs - have also undermined profitability in all three sectors.
Meanwhile, Moody's said while its industry outlook is negative, the rating outlook for most of its rated issuers is stable.
The reason for this disparity is that rated shipping companies such as MISC, BW Shipping, NYK and MOL are supported by use of many of their vessels under long-term agreements, adequate liquidity, based on good access to bank financing, and diversified trade and vessel types.
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