Shipping emerges as the least optimistic sector in our survey with 69 per cent of respondents reporting positivity about market conditions compared with 81 per cent in rail and 75 per cent in aviation.
It is also the most worried about overcapacity (although more respondents believe this is being resolved than those from aviation or rail) and the sector with the highest percentage reporting reduced activity in key sectors.
Our shipping respondents cite new ships as the sector’s best investment option; a view that, as with aviation, is held more strongly among participants than commentators.
The second investment choice for the sector is developing new markets through joint ventures, alliances or pooling arrangements. China is still seen as the most important market, though since 2010 confidence has dropped.
Shipping is also the most optimistic sector in its prediction of a rise in infrastructure investment – up from 48 per cent in 2010 to 62 per cent in this survey.
Over a third of respondents believe that a more beneficial view of assets for riskweighting purposes is needed (23 per cent compared with aviation’s 15 and rail’s 10 per cent). There is some limited interest in tax incentives for lenders, but virtually no support for a relaxation of stock exchange rules. Deregulation, however, is becoming more popular as a form of government support.
Funding sources in the sector are variable and change from year to year. The most popular sources remain shareholders/ equity and bank debt, but the third most popular source, private equity, is gaining in popularity, as are capital markets/bonds.
The next five years
This sector reports the most negative response to high-capacity or high-speed assets, with almost 30 per cent seeing these as creating overcapacity – much higher than aviation and rail (11 and six per cent). While some feel they will open up new opportunities, 22 per cent express doubt over their sustainability.
In common with the other two sectors, shipping respondents believe that larger participants in the sector are likely to become more dominant over the next five years, and that joint venture/alliance and pool activity will also increase. However, running a close third in this sector is the view that new funding sources will provide new participants.
Worries about supply and demand imbalances (ie, overcapacity) at 36 per cent, outweigh other issues such as intermodal/logistical inefficiencies, emission controls or inadequate infrastructure (all at five – six per cent).
Optimism about rising fares/freights is stable at 66 per cent, with 10 per cent fewer than in 2010 expecting a fall. There is also increased optimism regarding investment in infrastructure, with 62 per cent foreseeing a rise in this area. Similarly, 77 per cent think passenger numbers/freight volume will increase (though fewer participants than commentators). Half the respondents predict a rise in routes/services and only 8 per cent are talking of a fall (down from 31 per cent in 2010).
Fuel prices are an ongoing concern and the number one determining criterion for fuel choice, followed by regulatory and environmental controls (of more concern to commentators than to participants).
Focus is on equity raising and/or debt, forming strategic alliances/joint ventures/ pools, with a growing interest in strategic acquisitions and the strategic disposal of non-core assets.